Kogan surges on to New Zealand shores with $122m eCommerce acquisition

Following a proven model that skyrocketed Kogan.com (ASX: KGN) to the top of Australia’s eCommerce market, the online retailer is set to follow a similar path in New Zealand with the acquisition of Mighty Ape and its 895,000 subscribers. 

A homegrown retailer in New Zealand, Mighty Ape has built a reputation for its quick delivery and excellent customer service where its online stores sell all kinds of products such as toys, books, electronics, computers and homewares. 

With 161 full time employees, Mighty Ape has established its position at the top of New Zealand’s online retail market where it was awarded Kantar’s highest rating among retailers for its customer experience. 

For the 12 months up to September 2020, Mighty Ape generated $120.1m in revenue for $9.9m EBITDA. All shares will be acquired by Kogan for cash consideration of $122.4m which will be funded by existing cash reserves and payable over 4 years. 

“Mighty Ape will give us significant scale in New Zealand and further strength across a variety of operational dimensions,” said Kogan.com CEO and CFO, David Shafer. 

“We will be drawing on Mighty Ape’s deep experience in gaming, toys, other entertainment product categories and the New Zealand market, and combining this experience with Kogan.com’s sourcing, technology, systems, infrastructure, and marketplace capabilities, to further enhance the group’s already market-leading offering across the Tasman.” 

The acquisition is expected to significantly increase the product range that will be offered to New Zealand residents where customers will benefit from Kogan’s product sourcing network and marketing infrastructure. 

Of most value from the acquisition will be Mighty Ape’s mailing list of 895,000 Kiwis of which 695,000 are unique customers. 

This method of entering the New Zealand market is similar to how Kogan.com acquired fledgling retailer Dick Smith’s online business in 2016 to build their Australian eCommerce platform which is now one of Australia’s leading retailers without having a single brick-and-mortar store. 

In Australia, Kogan.com has more than 2.1 million active customers and for FY20 generated $769.8m in sales for $46.5m EBITDA. 

Emerald Financial recently released a research report on Australian retailers with Buy, Sell, Hold ratings which can be accessed here. 

*Owners of this website are KGN shareholders.