The Kogan.com Ltd (ASX: KGN) share price is in focus today as news emerged that its crypto deal is seemingly changing shape.
What does Kogan have to do with crypto?
Kogan is one of the largest online retailers in Australia, but in mid-December, the ASX share revealed that it had entered into an agreement with Bitbuy. Bitbuy is one of Canada’s largest cryptocurrency trading platforms.
The deal was that Bitbuy’s parent business would buy bitbuy.com from Kogan. In addition, Kogan and Bitbuy would provide marketing support to Bitbuy’s future launch into the Australian market.
How did Kogan end up with that web address? It owns and manages a portfolio of domain names.
At the time of the announcement, the Kogan executive director David Shafer said:
The domain sale not only delivers returns for Kogan shareholders, but also provides an opportunity to benefit from Bitbuy’s future success in the crypto business abroad and potentially in the Australian market.
How is it changing?
Wonderfi Technologies is a business involved in developing solutions that makes the digital finance world accessible to everyone by investing in assets and infrastructure that power decentralized finance.
Bitbuy is being taken over by Wonderfi Technologies through a mixture of shares and cash. The transaction has been approved by the boards of directors of both WonderFi and Bitbuy. It’s expected to close in the first quarter of 2022.
Wonderfi was happy about the deal as it introduces multiple new business lines, adds hundreds of thousands of new users and brings over $455 million of assets under custody at 31 December 2021.
The takeover also referred to material revenue and cost synergies being expected through user base integration, cross-selling services and a combined global offering.
What does this mean for Kogan?
There has been no announcement of what this means for Kogan or how this will develop.
When Kogan first announced the news, it was deemed to be non-price sensitive. The upfront sale price was US$1.5 million in cash and a warrant entitling Kogan to approximately C$2.8 million in either equity in First Ledger or cash upon exercise of the warrant which would occur within one year after the transfer of the Domain.
It wasn’t stated how much Kogan was expecting to receive in advertising services in relation to Bitbuy expanding into Australia.
Is the ASX share an opportunity?
The Kogan share price has sunk 28% over the last six months. The broker Credit Suisse thinks it’s a buy, with a price target of $13.88. That’s a potential upside of over 70%, if the broker is proven correct.
It noted that the company’s customers and top line continues to rise rapidly, though profit margins were lower than expected in the first quarter of FY22.