Moonpig shares were up 10.6% to 260p in early morning trading on Monday, following the bespoke card company’s proposal to acquire experience provider Buyagift for £124 million.
Moonpig commented that the acquisition would unlock the growing £6 billion UK gift experiences market, alongside its potential to leverage the firm’s bespoke gifting expertise to deliver highly relevant gift recommendations across a wide range of products.
The special occasion firm said it aimed to become the “ultimate gifting companion” with the proposed deal.
The company highlighted Buyagift’s impressive financial track record, including its 3.3 million customers across the group’s Buyagift and Red Letter Days brands, along with consistent double-digit revenue growth on compound annual growth rate over the last ten years, with an aim to grow to mid-teens over the medium term.
The card firm also drew attention to the company’s strong financial model, which reportedly boasted consistent revenue growth, high margins and robust cash generation.
Moonpig noted the cash consideration of £124 million against an unaudited FY 2022 EBITDA of £14 million for the firm, with a proposed 100% cash funded agreement through cash on balance sheet and a committed extension to Buyagift’s senior revolving credit facilities.
Moonpig further mentioned an adjusted EPS accretion over 20% in the first year of the acquisition, with an ROIC above WACC in the third year, alongside a net debt to adjusted EBITDA below 200% by April 2023.
“The proposed acquisition of Buyagift rapidly accelerates Moonpig Group’s journey to become the ultimate gifting companion,” said Moonpig CEO Nickyl Raithatha.
“There is strong strategic rationale for the transaction, and compelling financial benefits. Buyagift is profitable and highly cash generative, with a proven track record of strong growth and we are excited by the ways that we can further transform the business using the Group’s proven playbook.”
“We see significant potential for the cross-selling of gifting experiences to Moonpig Group’s loyal customers. We look forward to working with the Buyagift team to deliver an enhanced proposition for our customers and to create value for our shareholders.”
