Allegro to acquire Mall Group
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Allegro has decided to acquire Central and Eastern European e-commerce platform Mall Group for EUR 881m. The transaction will allow the sales platform to expand its capabilities to process orders in foreign markets, while the cooperation between the companies will enable the exchange of technology and business experience.
Mall Group is one of the largest e-commerce platforms in Central and Eastern Europe, with a GMV of PLN 4.3 billion in the financial year ending March 2021. The gross margin remained at 14%, and EBITDA levels were positive. The transaction, which will see Allegro acquire 100% of Mall Group and WE|DO from the selling shareholders PPF, EC Investments and Rockaway Capital, will amount to €881m. This amount is based on a valuation of the company at EUR 925m and the deduction of debt and debt-like items, which amounted to EUR 44m. It is understood that the transaction price may still be increased but by no more than EUR 50m. The reason for such changes may include planned short-term objectives.
By acquiring the e-commerce assets of Mall Group and the logistics assets of WE|DO, Allegro is opening up to the markets in the Czech Republic, Slovakia, Hungary, Slovenia and Croatia. The value of the transaction will be equivalent to GMV for the 12 months to March 2021 and approximately 7.2x gross profit for the 12 months to March 2021.
Allegro’s expansion into foreign markets
Cooperation with Mall Group will allow Allegro to reach new customers in other European countries and to extend the offer for existing customers of the platform, who number as many as 18m. Thanks to the merger of the companies, it will also be possible to expand the platform with new language versions and implement tools to support sales in foreign markets. As emphasised by François Nuyts, CEO of Allegro, the cooperation with Mall Group will create an international team, which will operate in the retail market worth more than PLN 1.1 trillion. The Allegro CEO adds that the number of consumers in the retail market in Poland, the Czech Republic, Slovakia, Slovenia, Hungary and Croatia is more than 70 million.
The transaction will double the group’s total market in countries with very attractive economic indicators and high growth potential. It will also contribute to the acquisition of new retailers, which in turn will help to reach new customers. Mall Group will be able to benefit from Allegro’s 20 years of experience to increase margins and attract new revenue streams. On the other hand, the jointly developed platform will also be another opportunity for Allegro to broaden its offer, which will suit both Polish and foreign customers.
Development of the Mall Group
According to Jakub Havrlant, Chairman of the Board of Mall Group, CEO and founder of Rockaway Capital, the partnership with Allegro will help further develop Mall Group, which has been building its position in the Czech and CEE e-commerce market for more than seven years. As Jan Hanuš, CEO of Mall Group, adds, the Group’s business model will be able to match Allegro’s by offering access to extensive last-mile infrastructure and operational facilities in countries where Mall Group is present. In addition, with Allegro’s support, the Group will develop its 3P business, which in the future will entail an enlarged offer and increased frequency of transactions. This, in turn, will increase profitability.
The CEO of Mall Group also adds that due to the strong position of both companies in the CEE market, it will be possible to create a platform that perfectly matches the expectations of local consumers and the companies will be able to offer a full package of services in six countries in this part of Europe for both their customers and sellers. As Jan Hanuš points out, both companies are committed to innovation and the collaboration will help increase the talent pool in the region.
Mall Group is one of the largest e-commerce players in CEE. The company focuses on popular consumer brands that attract customers. The transaction with Allegro will be an opportunity for the Group to accelerate its growth through new technologies and to acquire 3P business expertise. Both will benefit from the exchange of know-how and create an international platform focused on growth in foreign markets.
Polish e-commerce market will exceed PLN 110bn
According to PMR data, in 2020 the Polish online retail market was worth nearly PLN 89bn, after spectacular growth fuelled by the COVID-19 pandemic. In 2021 it will grow by another over 20% and exceed PLN 110bn. Sales on trading platforms account for about half of the market value. Apart from Allegro, online stores have a strong position, including those from the omnichannel model, i.e. connected to stationary stores. The largest e-shops are euro.com.pl, zalando.pl, mediaexpert.pl, ikea.pl, oponeo.pl – each of them has revenues of nearly PLN 1bn or more.
