Australias Woolworths offers to buy majority stake in MyDeal.com

div classBodysc17zpet90 cdBBJodivpReuters – Australias Woolworths Group on Friday offered to buy 80 stake in online retailer MyDeal.com, as it looks to take on major internet retail giants operating in the country that includes Amazon.com.p

pThe A217.4 million 152.88 million deal involves Woolworths paying A1.05 per share of MyDeal — a near 63 premium to the stock‘s last close on Thursday. MyDeal’s shares surged about 57 and were on track to see their best day ever.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe proposed buyout of MyDeal, one of Australias largest internet retail businesses, aims to help Woolworths compete better with the likes of Amazon in the country, where it already has rivals in discount department stores Kmart and Target, stationery vendor Officeworks and hardware chain Bunnings — all selling goods that are also sold on Amazon.p

p“The scheme is an attractive transaction, which provides an allcash option for MyDeal shareholders” MyDeal Chairman Paul Greenberg said in statement. Separately, its board also recommended shareholders to vote in favour of the buyout.p

pAlmost 60 of the shares being sold to Woolworths will be from MyDeal‘s Chief Executive Officer Sean Senvirtne’s stake. He will also hold the remaining interest in the company.p

pAnalysts at Barrenjoey said in a note that the acquisition looks to be a tacit acknowledgement that Woolworths‘s marketplace isn’t gaining traction.p

p“Woolworths has struggled to generate returns in nonfood businesses, so we question why they would allocate capital like this.”p

p1 1.4221 Australian dollars