Majestic acquires Naked Wines and names new CEO
Majestic Wine is to acquire customer funded online wine business Naked Wines as the company looks to increase its online capabilities and pursue international growth.
The acquisition will also include Naked Wines founder Rowan Gormley becoming the chief executive of the enlarged business, taking over from Steve Lewis who stepped down in February after 29 years.
Majestic said the transaction will create a “significant” strategic opportunity for both businesses by sharing Naked Wines’ online and e-commerce skills and Majestic’s national store network although the two businesses will continue to operate as separate brands. It will also help Majestic to expand into the US and Australia.
Phil Wrigley, Majestic chairman, said: “The acquisition of Naked Wines represents a transformational deal. The two businesses have significant strengths which are very complementary. Majestic’s distribution skills, a nationwide UK store network and customer service orientated knowledgeable staff, are a perfect fit with Naked Wines’ unique sourcing and selling model.
“This acquisition will significantly accelerate the planned development of Majestic’s online capabilities whilst providing Naked Wines with a nationwide store network to allow a Click & Collect delivery option for its customers. In addition, this acquisition opens up attractive international markets, increasing our potential customer reach eightfold.”
In the year ended 31 December 2014, sales at Naked Wines grew by 40% to £74 million year-on-year with an EBITDA loss of £3.3 million. It currently has over 300,000 customers funding over 130 winemakers.
The Naked Wines senior team will remain with the business following the acquisition and will receive over 70% of their potential consideration in Majestic’s ordinary shares, which will all be subject to performance criteria.
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. This is great news for the customers, staff and suppliers of both businesses and will ultimately create significant shareholder value.”
While giving a trading update, Majestic said its store sales had grown by 4.1% on a total basis and by 1.5% on a like-for-like basis since its last trading update on 7 January. While January and February were in line with expectations, March trading was weaker.
Majestic now expects adjusted pre-tax profit for the full year to be approximately £21 million.
