Wesfarmers announces $230 million acquisition of Catch Group

The Wesfarmers Ltd (ASX:WES) share price is trading higher this morning after announcing the $230 million acquisition of online retail Catch Group…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Wesfarmers Ltd (ASX: WES) share price has pushed higher in morning trade after announcing a new acquisition.

At the time of writing the conglomerate's shares are up 0.5% to $38.73.

What did Wesfarmers announce?

Just a couple of weeks after entering into a scheme of arrangement with lithium miner Kidman Resources Ltd (ASX: KDR), this morning Wesfarmers announced that it has entered into an agreement to acquire Australian online retailer Catch Group for a cash consideration of $230 million.

It will be funded from existing debt facilities and is not expected to impact Wesfarmers' existing credit ratings.

Catch Group is a profitable and cash-generative business that operates an online business model offering branded products on a first-party basis and a third-party online marketplace. Its online operations are supported by two fulfilment centres in Victoria.

Wesfarmers managing director, Rob Scott, believes the acquisition is consistent with the company's disciplined approach to capital allocation. This includes investment in opportunities adjacent to its existing businesses.

It is also consistent with Wesfarmers' focus on investing in and building its data and digital capabilities.

Mr Scott added: "Catch Group has a high calibre management team and a leading e-commerce platform with quality fulfilment assets. This acquisition represents an opportunity to accelerate Wesfarmers and Kmart Group's digital and e-commerce capabilities whilst continuing to invest in the unique customer and supplier proposition provided by Catch Group."

Should the acquisition complete successfully, Catch Group will operate as an independent business unit under the oversight of Ian Bailey, the managing director of Kmart Group.

Mr Bailey said: "We are excited to work with the Catch team and look forward to leveraging our capabilities to grow the business and accelerate the customer-driven, omni-channel initiatives across Kmart and Target."

He sees a lot of positives for both the acquired business and Kmart Group's existing businesses.

Adding: "This will further drive best practice in supply chain, fulfilment and online execution across our brands, including opportunities for Target to secure online fulfilment capacity and productivity benefits. Catch will also benefit from the support of Kmart Group's scale and capabilities to drive its continued growth in its existing marketplace business."

The acquisition is subject to a number of conditions including approval by the Australian Competition and Consumer Commission merger clearance. A decision on this is expected in the coming months.

Elsewhere in the sector, the Woolworths Group Ltd (ASX: WOW) share price has pushed higher today despite being taken to the Fair Work Commission.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

An executive stands looking out a glass window over the city.
Best Shares

The ASX bosses getting richer on the back of soaring ASX shares

These founders and CEOs made money hand over fist last financial year...

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

These ASX shares could rise ~20% to 40%

Analysts believe these shares could generate big returns for investors.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

5 mini houses on a pile of coins.
Share Market News

Here's how the ASX 200 market sectors stacked up last week

ASX real estate shares were strongest amid a volatile week during which the ASX 200 set a new record.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Which beaten down ASX 200 share did Goldman Sachs just upgrade to a buy rating?

The broker has become more bullish on this stock following last week's update.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Best Shares

The best ASX shares to invest $1,000 in right now

Analysts think that putting your money into these stocks could be a smart move.

Read more »

green etf represented by letters E,T and F sitting on green grass
Share Market News

4 ASX ETFs to buy for FY25 and beyond

Could these ETFs be top options for investors looking for long term picks?

Read more »

A smiling woman sips coffee at a cafe ready to learn about ASX investing concepts.
Opinions

How I'd invest $10,000 in ASX shares right now

I’m bullish about the prospects of these stocks.

Read more »