Photo: John Kolesidis Photo: John Kolesidis
London - Majestic Wine has agreed to acquire online wine retailer Naked Wines to expand internationally, in a cash and stock deal worth as much as 70 million pounds.
Majestic will pay about 50 million pounds in cash, funded by new debt facilities, with a further payment of up to 20 million pounds in shares. The Watford, England-based company sees the deal adding to diluted earnings per share in 2017 and has named Naked Wines founder Rowan Gormley as head of the combined business.
“The acquisition of Naked Wines represents a transformational deal,” Majestic’s chairman Phil Wrigley said in a statement, adding that Naked Wines’s exposure to countries such as the US and Australia increases the company’s potential customer base eightfold.
The deal will help Majestic diversify away from its home market, where it is battling with stagnant sales growth and intense competition. In addition to selling to new markets, Majestic will be able to offer click-and-collect services through its national store network.
For the year ended 31 December 2014, Naked had sales of £74 million, up 40 percent year-on-year, though losses before interest, tax. depreciation and amortisation were £3.3 million. Its customers pay a monthly fee in exchange for heavy discounts on their wine purchases.
Majestic separately on Friday ruled out paying both a final dividend to shareholders for the 2015 financial year and an interim dividend next year. Dividends will be “progressively” re-instated by 2018, the company said. It said it expects adjusted pretax profit of about 21 million pounds for the year to March 31.
The UK is the sixth-largest market worldwide for still light wine, according to researcher IWSR. Sales by volume in Britain have declined over the past five years, because of the economic slowdown and a drop in wine consumption in bars and pubs, IWSR said. Emerging markets like China and Russia have seen an increase in sales, as has the US, the world’s biggest market.
Bloomberg