WOOLWORTHS LOBS $243M BID FOR MYDEAL
WOOLWORTHS is expanding deeper into the online marketplace space with the $243m proportional takeover bid for ASX-listed MyDeal.com.au, as chief executive Brad Banducci continues to reshape the supermarket giant.
However, for MyDeal investors, the bid excitement from Australia’s biggest retailer may be cooled somewhat by the $1.05 per share offer price, which is just above the $1 per share price that it was sold for in its 2020 float.
The stock still soared 56 per cent on the news to $1.005 on Friday.
They had traded as high as $2.20 just after the IPO, but have been on a downward trend ever since.
The takeover will also be a pay-off for early investors in the online marketplace such as Tony Gandel, the son of shopping centres billionaire John Gandel, who holds almost one third of the company through his investment arm.
Some analysts have questioned the deal’s rationale, highlighting Woolworths’ poor track record in non-food and asked if the takeover was an admission by the supermarket giant that its own online marketplace venture was not gaining traction.
“Over the years, Woolworths has struggled to generate returns in non-food businesses – Masters, Dick Smith, Big W – so we question why they would allocate capital like this,” said Barrenjoey analyst Tom
Kierath.
“Especially when Woolworths’ outstanding food business has had recent cost missteps. This acquisition looks to be a tacit acknowledgment that Woolworths marketplace isn’t gaining traction,” he wrote.
MyDeal.com.au also made a loss last financial year of $5.8m and this was through the peak of lockdowns.
“We can’t help but think if it didn’t make money through the Covid period will it ever?” Kierath said. “Based on SimilarWeb web traffic, MyDeal in the most recent four-week period generated around 870,000 visits, this compares with eBay 12.6m, Amazon 8.1m, Kogan 1.6m and Catch 1.7m.
“Traffic has declined significantly in recent months as the economy reopened.”
Woolworths announced the deal fresh from the recent demerger of its liquor and pubs arm Endeavour, the $552m purchase last year of a majority stake in food delivery business PFD and investments in tech and start-ups.