FILE PHOTO: FILE PHOTO: The Allegro logo is seen on the smartphone in this illustration taken October 12, 2020. REUTERS/Dado Ruvic/Illustration/File Photo
November 5, 2021
(Reuters) -Polish e-commerce group Allegro has agreed to buy Czech online retailer Mall Group for 881 million euros ($1.02 billion) to create a regional platform, sending its shares up as much as 11%.
Allegro announced late on Thursday that it would acquire the e-commerce assets of Mall Group and the logistics assets of WE|DO from Jakub Havrlant’s Rockaway Capital investment group, PPF Group and Daniel Kretinsky and Patrik Tkac’s EC Investments.
Allegro’s shares, which have fallen more than 40% this year amid competition jitters in its home market, were up 11% at 1234 GMT.
The deal comes amid intensifying competition in Central Europe, with Amazon launching its Prime service last month in Poland and Sea Ltd’s Shopee entering the country in September.
“Buyers will benefit from the improved selection, price and convenience, while a joint base of around 135,000 merchants will be able to ‘list once, sell everywhere’,” Allegro Chief Executive Francois Nuyts said in a statement.
Operating across the Czech Republic, Slovakia, Hungary, Slovenia, Croatia and Poland, the merged company will almost double its target retail market to 1.14 trillion zlotys ($285 billion) and 70 million people, Allegro said.
“It (the deal) doubles the headroom for growth, and that means that all the innovations we’re doing can scale much better and reach much more consumers, Nuyts told the media call.
“Mall Group operates in underpenetrated and fragmented markets, and there is a clear opportunity to drive growth via the marketplace. Allegro pays a good price for all of that, especially as the stock portion has been locked in 26% above yesterday’s closing price,” Ivan Kim from Xtellus Capital said.
Under the deal the Polish company, which plans to have about 3,000 of parcel lockers by the end of 2022, gets access to WE|DO’s 1,100 pick-up points and lockers, it said in a presentation.
“The WE|DO acquisition today skyrockets Allegro’s capabilities in cross-border fulfilment and last-mile logistics, a capability which it lacked, but ever wanted to expand,” Sebastian Patulea from Jefferies wrote in a comment to Reuters.
The final price might be increased by up to 50 million euros based on specific short-term objectives and the deal is expected to close in the second half of 2022.
The deal will be financed through a stock-and-cash consideration, Allegro said.
($1 = 0.8655 euros)
($1 = 3.9940 zlotys)
(Reporting by Anna Pruchnicka in Gdansk; Editing by Sherry Jacob-Phillips and Louise Heavens)