Wesfarmers Limited (ASX: WES) has announced this morning that the Australian Competition and Consumer Commission (ACCC) will not oppose its acquisition of Catch Group, which was announced to shareholders in June.
About Wesfarmers
Wesfarmers is a 100-year-old conglomerate which at various times has owned and operated some of Australia’s largest retail brands such as Kmart, Target and more. Today, its largest business is Bunnings Warehouse, the number-one DIY home improvement business.
Catch Acquisition
Wesfarmers announced on 12th June that it would be acquiring Australian online retailer Catch Group for $230 million to be paid in cash.
Catch Group owns the website catch.com.au where it offers out-of-season, clearance or overrun branded products and operates a growing online marketplace.
Wesfarmers Managing Director Rob Scott said in the original announcement: “This acquisition represents an opportunity to accelerate Wesfarmers and Kmart Group’s digital and e-commerce capabilities whilst continuing to invest in the unique customer and supplier proposition provided by Catch Group”.
The deal was subject to ACCC approval, which has now been granted. The ACCC review examined both physical and online retail competition and ACCC Commissioner Stephen Ridgeway said they would not oppose the acquisition.
“The current growth in online marketplaces is fostering competition between providers, and feedback indicated that Wesfarmers’ proposed acquisition of Catch would be unlikely to change that level of competition.”
What’s Next For Wesfarmers?
With ACCC approval now granted, this acquisition seems like it will go ahead. When the deal was first announced in June, the Wesfarmers share price dropped but has since recovered. While I can’t say if Wesfarmers is paying the right price for Catch, I do think it makes sense for them to enhance their online capabilities in a sector that’s increasingly moving away from brick and mortar stores.
For other high-quality Australian companies, have a look at the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
