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Kogan.com share price on watch following acquisition news

The Kogan.com Ltd (ASX: KGN) share price will be one to watch today after the ecommerce company expanded its offering with an acquisition.

What has Kogan acquired?

This morning Kogan announced that it has acquired replica furniture and homewares retailer Matt Blatt.

Matt Blatt is a family-run business that was founded in 1981. In FY 2019 it recorded $46.5 million of revenue, of which ~20% to 25% came from its online business.

In March the company was in financial distress because of the coronavirus pandemic and revealed to Inside Retail that it had called in advisors to facilitate a potential sale. A number of parties were believed to be interested, but Kogan has proven to be the successful suitor.

It has acquired the company’s intellectual property and goodwill for a purchase price of $4.4 million. This has been funded by the company’s cash reserves.

Based on FY 2019’s online sales of ~$10.45 million, this represents an attractive multiple of 0.42x sales. As a comparison, Kogan’s shares are changing hands for 1.45x FY 2019 gross sales.

What now?

Kogan will relaunch the business as an online-only offering and go head to head with the likes of Adairs Ltd (ASX: ADH) and Temple & Webster Group Ltd (ASX: TPW).

Kogan’s founder and CEO, Ruslan Kogan, commented: “We are pleased to bring the iconic Matt Blatt brand into new ownership, and relaunch the business as an online-only offering. Our acquisition of Matt Blatt gives us a springboard from which to expand our reach in the furniture and homewares market.”

“We will be drawing on Matt Blatt’s decades of industry expertise and combining it with Kogan.com’s technology, systems and infrastructure to deliver a market-leading offering. We look forward to serving and delighting furniture and design lovers all over Australia,” the chief executive concluded.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. 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.

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