Wednesday, February 20, 2019

Majestic Wine uncorks an acquisition of its smaller rival


Online wine retailer Naked Wines has decided if you can‘t beat them, join them.  Majestic Wine, the UK‘s largest retailer of wine by the mixed case, has completed a £70m deal to buy its smaller rival and will appoint Naked Wine‘s founder as the new chief exec of the combined group.

The transaction will form an international, multi-channel specialist wine retailing group and create a significant strategic opportunity for both businesses by sharing complementary strengths: Naked‘s online and e-commerce skills and Majestic‘s national store network. The transaction also opens up attractive international growth in the USA and Australia. Majestic and Naked Wines will continue to operate as independent brands.

Following a difficult Christmas trading period, Majestic Wine‘s former CEO Steve Lewis exited the company in February. His replacement, Rowan Gormley, was the Virgin Money boss before he became a wine veteran.

In a statement Gormley said “The combination of Naked Wines and Majestic provides the very exciting opportunity to build a world class wine retailer, serving customers who are looking for inspiration that the supermarkets cannot provide.”

Majestic will pay £50m for the online wine boutique in the first instance, followed by another £20m in shares if certain conditions are met.

Jonathan Buxton, Partner at Cavendish Corporate Finance who advised on the deal, added:

“The combination of Naked Wines‘ robust growth track record and Majestic‘s market leading positioning make this transaction an excellent strategic fit for both companies. The enlarged Majestic Wine Group will benefit from new CEO Rowan Gormley‘s outstanding experience and industry expertise and help the business capitalise on supportive trends in the wine sector and the fast-growing ecommerce industry, both of which offer excellent growth opportunities.

The UK‘s premium wine segment is performing well as is the international direct to consumer market, with particularly strong growth in the US, a key area for the combined companies, while e-commerce is the fastest expanding retail market in Europe. The size of the UK‘s ecommerce sector is forecast to increase by some 16% this year to close to £45 bn.

With consumer trends in ecommerce continuing to evolve, most recently with the increase in mobile shopping and ‘click and collect‘ services, we expect to see increased M&A activity as companies competing in this arena look for strategic acquisitions to expand and enhance their operations and market positioning.”