Card Factory has agreed to acquire online personalised card retailer Funky Pigeon from WH Smith for £24 million cash, as the UK’s leading greeting card specialist accelerates its digital transformation.
The deal, which values Funky Pigeon at an enterprise value of £26 million, represents approximately five times Funky Pigeon’s earnings EBITDA.
Card Factory, primarily known for its network of outlets that distribute well-priced cards, is turning its attention online amid the decline of the UK high street. Funky Pigeon is the perfect way to do this.
Funky Pigeon has recorded robust financial performance over recent years, generating average annual revenues of around £32 million and EBITDA of approximately £5 million across the prior two financial years. The Bristol and Guernsey-based business operates the established funkypigeon.com platform, which specialises in personalised cards and attached gifting services.
Card Factory said the acquisition would accelerate the company’s existing digital strategy, providing a crucial platform for online growth in the direct-to-recipient card and attached gifting market.
“By combining Funky Pigeon’s digital platform with our existing omnichannel offer, we intend to leverage our 24 million unique store customers to develop a highly competitive online presence,” the company stated.
The deal positions Card Factory as the second-largest online card and attached gift retailer in the UK market, complementing its extensive nationwide store network of over 1,000 outlets.
Card Factory outlined a two-pronged digital strategy following the acquisition. Firstly, the company aims to serve online customers seeking convenient, great-value personalised cards with attached gift services. Secondly, it plans to extend its store-based party and celebration offerings through an enhanced omnichannel approach.
Over time, Funky Pigeon’s technology platform will become the core digital infrastructure for Card Factory’s UK and Ireland operations, driving operational efficiencies and improving customer experience.
The combined business will utilise both Funky Pigeon’s existing order fulfilment capabilities in Guernsey for personalised cards and Card Factory’s in-house manufacturing and fulfilment facility in Baildon, West Yorkshire, for card and attached gifting orders.