The BWX Ltd (ASX: BWX) share price is one to watch closely on Monday morning.
This follows the personal care product company’s announcement that it’s set make an acquisition to expand its e-commerce business offering.
What did BWX announce?
In a statement to the ASX, BWX advised that it has entered into an agreement to acquire Flora & Fauna.
Established in 2014, Flora & Fauna is a Sydney-based online retailer that is focused on selling vegan, ethical, and sustainable products. The company has grown to service over 94,000 active customers, with more than 300 brands across multiple categories.
Under the deal, BWX will pay somewhere between $27.9 million to $30.8 million for Flora & Fauna. This is provided that the latter is able to achieve a minimum multiple revenue-based performance for FY21. BWX expects the sale to represent 1.6 times to 1.8 times of actual FY21 revenue.
Flora & Fauna recorded strong sales growth last financial year, with FY20 revenue hitting $12 million. For the current FY21 period, the company is forecasting revenue to reach in the range of $16.4 million and $17.1 million.
BWX noted that the acquisition is unconditional and it has a right to terminate if the pre-agreed conditions are not satisfied. This includes if there is a significant material change or revenue drop below the pre-determined floor before the close of the sale.
BWX will fully fund the deal through its available debt facilities. Completion of the sale is estimated to be in July 2021.
What did management say?
BWX group CEO and managing director Dave Fenlon commented on the acquisition:
We are thrilled to welcome the Flora & Fauna team to the BWX family, and alongside Nourished Life, create a best-in-class ethical online retail platform.
With complementary categories and minimal consumer and SKU overlap, the two brands will benefit from a strategic approach to customer experience and promotions, as well as operational efficiencies.
Flora & Fauna founder and CEO Julie Mathers added:
This is a really exciting step for Flora & Fauna and the wider industry. BWX offers Flora & Fauna the opportunity to grow even further as a business with strong alignment about having a positive impact on the planet, people and animals.
BWX share price snapshot
Over the past 12 months, the BWX share price has posted a gain of almost 30%, with year-to-date performance above 10%.
Based on the current share price of $4.59, BWX commands a market capitalisation of around $644 million.