Woolworths, the parent company of New Zealand's Progressive
Enterprises, has bought EziBuy Holdings from founding
shareholders Peter and Gerard Gillespie and Catalyst
Investment Managers for $350 million.
The purchase is subject to approval from the Overseas
Investment Office but is likely to go ahead.
Craigs Investment Partners broker Chris Timms said companies
like Woolworths were keen to take a strong position in online
markets and EziBuy, which already had a presence in
Australia, fitted that model.
''They have bought a proven business that has shown it knows
what to do and has the formula right. Without knowing
anything about EziBuy's cash flow and profit, you would have
to say they are considerable given what Woolworths has paid
Woolworths was a top 10 listed Australian company with a
business model of volumes and margin, he said.
It was likely Woolworths would adopt and expand the EziBuy
model throughout its online network.
A price of $350 million was not a large outlay for a company
with market capitalisation of $A42 billion ($NZ48.2 billion),
Mr Timms said.
Woolworths group director of retail services Penny Winn said
in a statement the company was keen to invest in the next
phase of EziBuy's growth and believed the combination of the
two companies would boost its its own online capabilities.
Progressive already employed more than 18,500 in New Zealand
and EziBuy employed 500. Currently, 68% of EziBuy's sales
were to the Australian market.
''With a history of profitable growth and more than $NZ200
million in sales over the past financial year, and 550,000
loyal customers across Australia and New Zealand, the
business has been an enormous success in its own right.''
Woolworths was also seeking to learn from EziBuy's
direct-to-customers logistics at Palmerston North and apply
those lessons more broadly across the business, Ms Winn said.