Woolworths to buy 80% stake in MyDeal; how are WOW shares reacting?

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Woolworths to buy 80% stake in MyDeal; how are WOW shares reacting?

Woolworths to buy 80% stake in MyDeal; how are WOW shares reacting?
Image source: © Kiosea39 | Megapixl.com

Highlights

  • Woolies has proposed to buy an 80% stake in MyDeal.

  • The cash consideration of AU$1.05 per share values MyDeal’s equity at AU$271.8 million.

  • MyDeal board has recommended shareholders’ vote in favour of the transaction.

ASX retail giant Woolworths Group Ltd (ASX:WOW) on Friday announced the acquisition of a controlling stake in MyDeal (ASX:MYD) at an all-cash consideration of AU$1.05 per share. Woolies has proposed to buy an 80% stake in the ASX-listed online marketplace retailer for a premium of 62.8% to its last closing price of AU$0.65 per share, Woolworths Group said in its latest ASX filing.

The cash consideration of AU$1.05 per share by Australia’s largest supermarket operator values MyDeal’s equity at AU$271.8 million and enterprise value at AU$242.6 million.

According to the agreement, MyDeal’s Founder and CEO, Sean Senvirtne, and a few other key management shareholders would retain nearly 20% interest in MyDeal. These shareholders, along with the existing management team, would continue to lead the business through its next phase of growth in partnership with Woolworths Group, Woolies added.

MyDeal’s board has recommended shareholders’ vote in favour of the transaction.  MyDeal CEO Sean Senvirtne has granted a conditional call option over 19.9% of his shares to Woolworths.

How will the acquisition benefit Woolies?

According to Woolies, acquisition of a majority stake in MyDeal is expected to boost Woolworths Group's marketplace capabilities, particularly in furniture, homewares, and other bulky goods. It will complement BIG W's existing general merchandise offer. Similarly, MyDeal could access Woolworths Group's platforms and capabilities to support its continued growth.

 “The addition of MyDeal to Woolworths Group represents a further step towards delivering a more holistic customer experience in food and everyday needs and materially expands our marketplace capabilities, especially in general merchandise,” said Woolworths Group CEO, Brad Banducci.

MyDeal Founder and CEO, Sean Senvirtne, said, “The MyDeal team is excited by the opportunity to partner with Woolworths Group. It will help support the growth of our retail platform by accessing Woolworths Group’s capabilities across eCommerce, supply chain, retail, loyalty and more.”

Woolies’ share price snapshot

By 10:10 AM (AEST), Woolworths stock was trading at AU$34.96, down 0.64%.

The stock is down over 8% on a year-to-date (YTD) basis, while in the past one year, the stock has surged over 2%. The share price has fallen nearly 10% in the past one month.

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