Woolworths goes up against Amazon, Kogan with $250m MyDeal acquisition

Similarly, Morgans analyst Alex Lu said the transaction was “slightly curious” as it would increase Woolworths’ exposure to general merchandise during a period when consumers are struggling with rapidly increasing cost of living pressures.

Despite the concerns, Woolworths’ share price rose 1.7 per cent to $35.80 following the announcement. Chief executive Brad Banducci said the tie-up would complement Woolworths’ broader ‘food and everyday needs’ ecosystem strategy and would be a particular benefit to the company’s Big W department store, which already sells many similar products to MyDeal.

“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,” Banducci said.

MyDeal listed on the ASX in October 2020 and operates an online marketplace that sells a range of consumer goods including furniture, electronics, pet goods and kitchen appliances. Woolworths’ purchase will see the company compete with the likes of Kogan, Amazon and Catch.

Under the arrangement, MyDeal founder and chief executive Sean Senvirtne will retain 20 per cent of the business, though Woolworths will retain the option to purchase those remaining shares further down the track. The company will also be de-listed from the ASX.

Senvirtne currently owns just under half of MyDeal and has supported the bid alongside the company’s board, meaning the deal will almost certainly get shareholder approval, though it will still require a tick from the competition regulator.

“The transaction is a highly attractive proposition for MyDeal shareholders and represents a significant premium to MyDeal’s share price,” he said.

“I am excited to retain a significant and continued interest in MyDeal and to lead the business through its next stage of growth to become Australia’s leading marketplace.”

MyDeal listed during the mid-COVID boom for online retailers, floating with a share price of $1 which rose to $1.71 shortly after listing, though quickly fell to trade well under its IPO price. Senvirtne noted that the Woolworths’ offer would provide investors who bought in at the IPO with a 5 per cent premium.