The Rockaway Capital investment group, which has long been concentrating on investments in the digital economy, e-commerce, and e-grocery, as just completed another significant transaction. The group’s newest member…
Thanks to the merger of Allegro and MALL Group, services will be significantly improved and 135,000 retailers in Poland and throughout Central and Eastern Europe will gain wider access to the retail market (TAM) worth a total of 250 billion euros, numbering 70 million people. The transaction is expected to be completed in the first half of 2022.
Allegro, the most popular shopping platform in Poland and one of the world’s top ten e-commerce websites, today announces that it has agreed to acquire 100% of MALL Group and WE|DO from selling shareholders PPF, EC Investments, and Rockaway Capital. MALL Group and WE|DO will be acquired for a total amount of EUR 925 million plus earnings of up to 50 million euros depending on the performance of MALL Group.
The acquired business comprises the e-commerce assets of MALL Group and the logistics assets of WE|DO based across the Czech Republic, Slovakia, Hungary, Slovenia, Croatia and Poland. In FYE Mar-21, MALL Group achieved GMV of PLN 4.3bn, gross margin of 14% and EBITDA breakeven. The transaction value equates to ~1.0x LTM Mar-21 GMV and ~7.2x LTM Mar-21 Gross Profit.
François Nuyts, CEO of Allegro, says:
“Over two decades, Allegro has become the favourite shopping destination for consumers in Poland. Together with MALL Group and WE|DO we will now be able to improve the everyday lives of not only the 18m customers we already serve, but also reach out to the rest of Europe with our offer. Buyers will benefit from the improved selection, price, and convenience, while a joint base of around 135,000 merchants will be able to ‘list once, sell everywhere.’ As Allegro we have already developed the region’s best and most competitive offer selection, and we’re advanced in preparing our platform to support multiple languages and help merchants in selling abroad. With the MALL Group’s business included, our joint presence in Poland, the Czech Republic, Slovakia, Slovenia, Hungary, and Croatia – equivalent to over PLN 1.1 trillion and over 70m people – will also be the basis for creating a strong, international team in tech, e-commerce and logistics. This will allow us to attract new talent, offer new career opportunities across the enlarged group, and build an even more vibrant and diverse organisation.”
Joining forces to create a pan-CEE e-commerce leader
The tie-up between Mall Group and Allegro will establish a leading region-wide e-commerce platform, bringing a range of popular brands – including MALL, mimovrste, czc.cz, WE|DO and of course Allegro, Ceneo, eBilet, and One – under one roof. The joint platform’s clients will be able to take advantage of the Smart! programme as well as many loyalty benefits like free deliveries, fintech products, or access to the B2B platform. At the same time, merchants will gain access to a seamless selling experience, innovative solutions or advertising products.
The transaction nearly doubles the group’s total addressable market in countries with highly attractive fundamentals and growth potential. The combination will also enable efficient international merchants’ sourcing and onboarding as well as support new clients’ acquisition. Deploying Allegro’s 20-year+ marketplace experience will also allow it to improve margins and build additional revenue streams to support the joint groups’ further development.
Ultimately, the expansion of the platform will enable Allegro to create a best-in-class proposition for customers and merchants in Poland and beyond, accelerating its flywheel in Poland across the entire CEE region.
Jakub Havrlant, Chairman of the board of MALL Group, CEO and founder of Rockaway Capital, comments:
“After more than seven years of building a strong e-commerce position in the Czech Republic and in the CEE region, I’m delighted that we have found such a strong partner for further development of the MALL Group and WE|DO as Allegro. In Allegro, we recognise a partner with a similar focus on innovation, growth and a complementary culture. We also see a range of compelling synergies across our platforms and scope for significant acceleration of numerous projects already in place. As a Rockaway Capital shareholder, I’m glad that we remain part of the story and, as shareholders in the combined group, will participate in further growth. We believe that e-commerce still has great growth potential in Central and Eastern Europe, and I’m very much looking forward to further cooperation.”
Jan Hanuš, CEO of MALL Group, adds:
“We are incredibly excited about the prospects before us. Our business model fits perfectly to a group operating such a large marketplace and on top of this, we offer access to a large last-mile infrastructure and operations across the countries we operate in. We have also started to grow our 3P business and are looking forward to taking advantage of Allegro’s unrivalled expertise in this field. Both us and Allegro are home-grown CEE champions that understand local consumers’ needs better than anyone else. Combining our strengths, we’ll have a full package ready for customers and merchants in six Central European countries. I’m also excited for our teams. I see how our cultures fit, that we share the innovative, consumer-facing attitude, and that we’ll have the greatest talent pool in the region.”
Combining MALL Group’s deep regional knowledge and delivery expertise with Allegro’s 3P marketplace know-how
MALL Group has built some of the leading e-commerce businesses in the CEE region, combining a large customer base, strong traffic, highly popular consumer brands, and experienced cross-country teams. The transaction will give the group access to MALL Group and WE|DO’s cross-border fulfilment and last-mile logistics infrastructure, while Allegro brings in its 3P marketplace expertise and state-of-the-art technology to accelerate joint growth. The two companies’ advantages will thus be leveraged to the full, helping build a truly international business flywheel, based on the know-how from the joint teams . As Allegro will strengthen MALL Group’s 3P business, we also expect to see growth in MALL Group profitability through significant increase in offer selection and transaction frequency.
The transaction will be financed through a combination of stock and cash consideration comprising a ca. 53.7% cash consideration, financed with cash on hand and new debt, and a ca. 46.3% stock or cash consideration. Allegro has the discretion to either issue stock to MALL Group selling shareholders or raise incremental cash consideration. Allegro pro-forma leverage post-transaction is expected not to exceed 3.0x by the end of H1 2022. The closing of the transaction is subject to the customary antitrust and regulatory approvals and is expected to close in H1 2022. It will be one of the largest transactions in the CEE when finalised.
J.P. Morgan acted as exclusive financial advisor, Clifford Chance served as legal counsel to Allegro for this transaction. Morgan Stanley worked as an exclusive financial advisor and White & Case as a legal counsel for the MALL Group and its shareholders.