The secret of a successful M&A deal in E-commerce is a thorough analysis of all aspects of the companies’ activities and the study of the prospects for their coexistence. In addition to financial indicators, the flexibility of the logistics model, the specifics of the sales tax audit, duties and tariffs in the sales markets and the possibility of launching new channels/products are important.
For this reason, it is much more difficult to conduct successful M&A transactions in the e-commerce market. It is not uncommon that after buying a brand, the new owner had to sell it at a significant discount a year after signing the contract.
Below we will tell you about the most successful M&A deals in the field of electronic commerce.
Victoria’s Secret has signed an agreement with Adore Me
At the end of 2022, the famous lingerie brand Victoria’s Secret announced the purchase of the online store Adore Me, operating in the same niche. According to the sources of The Wall Street Journal, the price of the M&A transaction in the field of E-commerce was $ 400 million.
Over the 10 years of its existence, the Adore Me brand has managed to expand its customer base to 1.2 million regular customers and reach the level of $240 million in annual revenue. According to the statements of Victoria’s Secret management, the acquired company has achieved serious success in the field of electronic commerce. The brand plans to borrow experience and proven algorithms to optimize business processes in its companies.
Victoria’s Secret was also interested in Adore Me’s inclusive approach to organizing work with clients. This direction is recognized as a priority for the brand in the business development strategy for the next few years.
According to the terms of the contract, Adore Me founder and CEO Morgan Hermand-Weiche will retain his position after the takeover.
We should also not expect any changes in the corporate culture and reshuffles in the staff. Apparently, the buyer chose a soft takeover strategy while maintaining a high level of internal brand autonomy.
Too little time has passed to assess the financial performance of companies after the deal was concluded, but the analysis of soft M&A factors gives every reason to consider it successful.
Naver Corp bought Poshmark Inc. trading platform
In 2022, the South Korean Internet giant Naver Corp acquired the Poshmark Inc. fashion resale platform. The price of the M&A transaction in the field of E-commerce amounted to $1.2 billion.
It is known that Poshmark shares were bought at a price that was 18% higher than the value of the securities at the close of the last trading on the London Stock Exchange.
The purchase of the Poshmark platform was carried out by Naver Corp due to 2 important points:
- At the end of 5 years, Poshmark demonstrated revenue growth of 43.5%. This indicator is higher than that of many top sites.
- The sales volumes of used clothing are growing faster than those of the world’s 100 leading trading platforms.
At the time of signing the contract, Poshmark had 80 million registered users. On average, active shoppers spend about 25 minutes a day buying or selling online clothing on the platform.
According to analysts, for Poshmark, the merger made it possible to increase revenue by more than 20% and reduce annual expenses by $30 million over the next 2 years. Naver technology in the field of search and e-commerce will help to improve business indicators.
UPS acquired the Roadie platform
In 2022, UPS, an international company specializing in cargo delivery and logistics, entered into an agreement to acquire the Roadie technology platform. It provides merchants with delivery services to the United States through contract drivers. According to business analysts, the price of an M&A transaction in the field of E-commerce is $500 million.
UPS executives say that the purchase decision was dictated by the need to help customers, including large enterprises, find local solutions for the delivery of goods of all types.
In addition, the Roadie platform often provides services for the transportation of goods that are incompatible with the UPS network, due to their size, short shelf life and lack of packaging necessary to move through the UPS system.
The consolidation of the assets of the two companies has opened up new opportunities for the development of the delivery service. The developed UPS logistics infrastructure will be complemented by niche Roadie solutions. The conclusion of the M&A transaction in the field of E-commerce occurred during the accelerated growth of the e-commerce market in the context of a pandemic.
Agreement between Apollo and Shutterfly
In 2021, the investment company Apollo Global Management completed the purchase of the leading brand of personalized products and individual design in the field of e-commerce Shutterfly. The price of an E-commerce M&A transaction between major players was $2.9 billion.
According to Apollo management, the company paid $51 for each Shutterfly share, which is 13% higher than the value of the security as of the last trading day before the purchase.
Earlier , Thomas H. announced their desire to acquire the brand . Lee and Silver Lake Partners LP. The Shutterfly online store rejected offers, hoping to strengthen its position in the market on its own in competition with such giants as Wal-Mart, Costco and Target.
Financial difficulties forced the company to make a deal with Apollo Global Management. It is known that part of the funds from the M&A transaction in the field of E-commerce went to repay a debt of $ 900 million. Morgan Stanley Bank was invited as a consultant and observer.
HSN takeover by Liberty Interactive Corporatio conglomerate
In 2017, the conglomerate Liberty Interactive Corporation announced the completion of an E-commerce M&A deal to acquire 62% of HSN in the amount of $1.8 billion. Prior to that, the LIC already owned a package of the company’s securities, after which they ceased trading on the Nasdaq stock exchange.
HSN shareholders received a fixed refund in the amount of 1,650 ordinary shares of QVC for each HSN ordinary security owned by them.
Consolidation of HSN assets with other LIC companies (QVC, HSNi and Zulily) increased the efficiency of services and made it possible to optimize operating costs. Mike George, one of the QVC executives, said in 2018 that after combining the companies’ resources, the quality of service improved and the introduction of innovations accelerated.
Purchase of Cafe Press by Shutterfly
In 2018, after several years of declining revenues, the American online store CafePress, offering stock and customized products on demand, announced the sale of its shares to Shutterfly.
As part of the E-commerce M&A deal, assets were sold for $25.3 million (17.1 million shares at a price of $1.48 apiece). Prior to that, Shutterfly held talks with the company’s shareholders and received their support for 51% of the securities in circulation.
According to the Louisville Business Journal, shortly before the sale of its shares, Shutterfly was experiencing serious difficulties due to changes in Google search algorithms, rising shipping costs and the cost of upgrading the website. The reduction of staff made it possible to save about $ 7 million a year, but this was not enough to overcome the crisis.
After the deal with Shutterfly and the consolidation of assets, the situation changed. As a result of the merger, CafePress was able to attract more financial resources for the development of the site and its adaptation to new algorithms of search robots.
Shutterfly, after the conclusion of the M&A deal in the E-commerce sector, was able to adapt innovative CafePress solutions to further expand our production capabilities.
Etsy bought Reverb
In 2019, Etsy announced the purchase of a trading platform for new and used musical instruments Reverb for $275 million. The merger was another milestone in the history of long-term relations between the brands. A few years before the conclusion of the M&A deal in E-commerce, Etsy invested $32.5 million in Reverb.
The business model of the trading platform resembles eBay, but with a specialization in trading musical instruments. Since its inception, Reverb has raised almost $50 million thanks to sponsors such as PayPal founder Max Levchin and former Twitter director Adam Bain.
Shortly before the signing of the agreement, the capitalization of Etsy increased dramatically. The value of its shares reached an all-time high of $73 in March 2019. The decision to purchase Reverb shares was made as part of the implementation of the business diversification strategy.
Before the merger, the Etsy marketplace specialized in the sale of handmade products, in small editions. The merger with Reverb enabled the company to expand its product range and develop a new niche.
Despite the external differences, the brands had a similar business model: they focused on unique and vintage goods. After the merger, a sharp increase in the market capitalization of Etsy began. In just a year, the figure rose from $7 billion to $29.5 billion.
Let’s summarize the results
The success of an M&A transaction in E-commerce depends on a number of factors: costs, markets, finance, culture, style, values, legal aspects.
When assessing prospects, participants need to take into account not only financial issues, but also problems of promotion in the market in conditions of constant changes in the principles of search algorithms.
The most successful mergers and acquisitions in this area were concluded in the presence of similar business models, the correct valuation of non-tangible assets and the selection of the correct branding platform model.
Разрабатываем Стратегии для собственников бизнеса в целях оптимизации группы компаний, решения нестандартных задач и продажи активов. Оказываем услуги по сопровождению сделок M&A, управлению непрофильными активами и проектами в целом.
