Woolworths to takeover MyDeal at 63pc premium, opportune exit for shareholders

Woolworths (ASX: WOW) is set to acquire an 80% interest in MyDeal (ASX: MYD) to expand the company’s eCommerce capabilities and verticals.

The all-cash offer prices MyDeal at $1.05 per share, a significant 62.8% premium to the last closing price of 65 cents.

MyDeal CEO and founder Sean Senvirtne and other key management personnel will sell 60-70% of their current shareholdings into the takeover scheme. However, will retain a 20% minority shareholding post-takeover and continue to lead the business. 

MyDeal’s board believes this is a compelling offer and recommends shareholders to vote in favour of the transaction.

Takeover rationale

Woolworths CEO Brad Banducci said “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.” 

Woolworths Group eCommerce sales rose 33.4% to $1.46bn in the third-quarter of FY22, just shy of 10% of overall sales. 

Painful experience for IPO investors

MyDeal listed in October 2020, when the bullish run for eCommerce and tech stocks was on its last legs.

A familiar name like Kogan (ASX: KGN) topped out around $24.80 in October 2020, after an extraordinary 570% rally from covid lows. The stock is now down -85% from all-time highs.

The MyDeal IPO was priced at $1.00 per share and briefly rallied to $2.20 on its 22 October debut.

It's been downhill ever since. 

Saving grace

Woolworths has offered MyDeal investors a chance to wind back the clock and for IPO investors, to exit for a small profit.

Up until today, MyDeal shares were down in almost every timeframe:

• -37% from IPO offer price

• - 64% from debut close price

• -19% year-to-date

MyDeal 12-month price chart