Retailer Majestic Wine is eyeing international expansion after agreeing to swallow online rival Naked Wines for up to £70 million.
Naked Wines, which was founded in 2008, runs a crowdfunded business where some 300,000 subscribers help fund more than 130 independent wine-makers in 14 countries in exchange for access to exclusive wines at preferential prices.
It generated sales of £74m last year, up 40 per cent on a year ago, but suffered a loss of £3.3m.
The firms said yesterday that the combination boosted Majestic’s online presence while providing Naked Wines with a nationwide store network to allow a click-and-collect delivery option for its customers.
Majestic and Naked Wines will continue to operate as independent brands.
As part of the deal Naked Wines founder and chief executive Rowan Gormley will take over as boss of the enlarged group. He replaces Majestic’s Steve Lewis who left the retailer after six years in February following weak sales.
Majestic trades from more than 200 outlets, including 15 in Scotland, and has over 640,000 active customers. In January it said like-for-like sales edged up 1.1 per cent in the ten weeks to 5 January, but that it had to sacrifice margin in order to shift stock during the period. Total sales lifted 3.7 per cent.
Gormley said the deal provided “the very exciting opportunity to build a world-class wine retailer, serving customers who are looking for inspiration that the supermarkets cannot provide”.
He added: “This is great news for the customers, staff and suppliers of both businesses and will ultimately create significant shareholder value.”
Phil Wrigley, Majestic’s chairman, described the deal as “transformational”, saying the two businesses had “significant strengths which are very complementary”.
He added: “Majestic’s distribution skills, a nationwide UK store network and customer service orientated knowledgeable staff are a perfect fit with Naked Wines’ unique sourcing and selling model.
“This acquisition will significantly accelerate the planned development of Majestic’s online capabilities whilst providing Naked Wines with a nationwide store network to allow a click-and-collect delivery option for its customers.
“In addition, this acquisition opens up attractive international markets, increasing our potential customer reach eight-fold.”
He added: “[Gormley] has a fantastic track record as a successful businessman, innovator and entrepreneur in the wine industry and beyond. He has also assembled a deep pool of talent at Naked Wines with a similar culture to Majestic.”
Analysts at brokerage Investec Securities said they were upgrading shares in Majestic to a “buy”.
In a note, analyst Kate Calvert said: “The acquisition of Naked Wines… represents the sort of radical thinking we were hoping would come out of the strategic review and gives Majestic growth opportunities beyond the UK.
“Both businesses have much to gain from each other.
“We expect Mr Gormley to look to unlock Majestic’s online potential, improve its CRM [customer relationship management], leverage its store network distribution and moderate store roll out plans.”
Under the terms of the takeover deal, Majestic will pay about £50m in cash, to be funded through new debt, and £20m in shares.