Digital Wine (ASX:DW8) acquires B2B business Kaddy Australia

Highlights

  • Digital Wine Ventures (ASX:DW8) is accelerating penetration in Australian wholesale markets.
  • DW8 has acquired B2B beverage marketplace Kaddy Australia.
  • The acquisition shall merge two rapidly growing technology businesses.

Technology-driven beverage company Digital Wine Ventures Limited (ASX:DW8) has signed a binding term sheet to acquire 100% of Kaddy Australia Pty Limited, one of Australia’s leading B2B beverage marketplaces.

The acquisition will accelerate DW8’s penetration into the AU$17 billion-Australian wholesale liquor market.

DW8’s Kaddy acquisition details

  • Digital Wine Ventures will acquire 100% of Kaddy, a B2B beverage marketplace that enables discovery, ordering and payments.
  • The acquisition consideration will consist of AU$6.75 million in cash and approximately 484.9 million DW8 shares.
  • 71% of the cash consideration will go to Kaddy independent shareholders & the remaining 29% to Kaddy Founders & Employees. 94% of the share consideration will be subject to escrow.
  • Mike Abbott, co-founder of Kaddy, will also join the DW8’s Board as an executive director.
  • DW8 claims the acquisition to be a transformational opportunity to bring together two high-growth technology businesses for creating a market-leading online marketplace in Australia.

  • The acquisition brings together Kaddy’s front-end marketplace, and DW8 owned WINEDEPOT’s logistics platform.
  • Both platforms are being considered relatively easy to integrate and difficult to replicate by competitors.
  • The deal will result in a notable expansion of DW8’s will fast-track DW8’s international expansion plans and penetration into new markets and verticals.
  • The acquisition is believed to provide strategic, revenue and cost synergies, including increased network effects and customer lifetime value, driving enhanced revenue.
  • DW8 has initiated an AU$14.75 million capital raise for acquisition funding and the needed expansion capital for Kaddy.
  • It has already received commitments for AU$12.75 million via a share placement.

More about DW8 and its WINEDEPOT platform

Digital wine venture (DW8) is an Australian beverage-focused company that identifies and invests in early-stage technology-driven ventures that can potentially digitally transform the global beverage markets. Its tech-enabled logistics platform WINEDEPOT (winedepot.com) is designed to streamline wine & beverage distribution.

The platform has been created for DW8, a direct-to-trade marketplace. It also offers payment management and logistics fulfilment solutions to DW8. The revenue is generated majorly from trading fees, sales commissions and connect platform fees. It also makes money from liquidity and logistics fees. 

The WINEDEPOT platform primarily aims to solidify DW8’s presence in Australasia with plans of expanding into other key markets like the USA, Canada, Europe, Hong Kong, and Singapore.

Bottom line

Considerable synergies seem to exist in the current acquisition by DW8. The combination of technologies shall reduce the time required to reach scale and profitability while establishing a competitive moat for both businesses. In addition, the integration of the Kaddy platform can help it with industry penetration and accelerate digital commerce in the wholesale alcohol industry.

However, on ASX today, DW8 shares are trading 5.3% below previous close, at AU$0.062 per share at 1:12PM AEST.      

Read More- ASX 200 Set To Rise; Eagers Automotive, HUB24 To Pay Dividends Today

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