The Kogan.com Ltd (ASX: KGN) share price is in focus after the e-commerce ASX share announced the acquisition of Brosa.
Brosa is reportedly one of Australia’s largest online luxury furniture retailers, though it was in administration.
Kogan buys Brosa
The ASX share is spending $1.5 million plus giving logistics support for thousands of customers that have undelivered orders.
Prior Brosa customers who have paid for undelivered goods will be contacted with fulfillment options.
In FY22, Brosa generated $75 million of revenue, and it has around 500,000 subscribers. Kogan said that the business was recently valued at over $60 million.
This acquisition will “significantly expand Kogan.com’s share of the online furniture market.”
Kogan will relaunch Brosa.com.au and offer to resolve unfulfilled customer orders, where Brosa has the product in stock. These customers will be contacted by Kogan.com about arrangements in the coming weeks.
This deal will be funded by the company’s cash reserves.
The company will be buying the intellectual property, goodwill and stock, but excludes all leases and other liabilities.
Management comments
Kogan.com chief operating officer and chief financial officer David Shafer said:
The acquisition of Brosa by Kogan will broaden the online furniture offering of the Kogan Group, providing unprecedented range and value to Brosa customers, while also expanding the range of furniture and homewares available to Kogan customers. We are pleased to be able to offer a lifeline to Brosa customers, to be able to save the Brosa brand, and to relaunch Brosa.com.au very shortly. Following years of investment in brand-building and marketing, Brosa is a well known online furniture brand in Australia, and we are delighted to be able to bring the brand within the Kogan Group.
Summary thoughts on Kogan shares
This seems like a smart bit of business by Kogan. Brosa joins Dick Smith, Matt Blatt and Mighty Ape within the Kogan group of businesses. It builds up the company’s brand portfolio.
If the business keeps generating tens of millions of dollars of revenue, then it could be a great deal.
I’m not sure if the Kogan share price is worth going for. Ignoring the COVID period, in 2019 it was demonstrating good profit margin growth as it scaled. However, I’m not sure if it will be able to get back to that – we’ll have to see if it can get over the current difficulties.
For now, I think there are other ASX growth shares I’d rather buy.
