AuMake to acquire competitor for $15 million
AuMake has entered into a binding agreement to acquire the Chinese tourist retailer Broadway for $15 million (A$14.2 million).
The acquisition will increase AuMake’s retail footprint to 25 stores, adding a further eight across the east coast of Australia and New Zealand.
Broadway primarily distributes and sells products similar to AuMake, such as health supplements, infant formula, wool, food products (including honey), and other consumables, with a particular focus on Chinese tourists.
“This acquisition is transformative for AuMake and a turning point in our evolution as a company,” Keong Chan, AuMake executive chairman, said.
“The dynamic combination of AuMake and Broadway will create the leading brand in the cross border and Chinese tour group markets, which we estimate to be worth over A$4.5 billion ($4.8 billion) in Australia and New Zealand.”
The daigou-focused retailer plans to issue 43.75 million new shares to fund the acquisition to the effect of $7.4 million (A$7 million) – $5.3 million (A$5 million) of which will go to fund the acquisition, with the remaining $2.1 million (A$2 million) to be used for post-purchase transaction costs, online sales functionality, marketing and capital.
Once the acquisition and equity funding are finalised, AuMake will focus on converting offline Broadway customers online to increase repeat sales and take advantage of higher margins, increase the sales of own-branded products to Broadways customer base, as well as increasing the number of offline tourists visiting AuMake and Broadway stores.
“We will continue to build on our strategic relationship with JD.com and are confident that further, exciting and highly lucrative opportunities from China will avail themselves as our brand equity continues to grow,” Chan said.
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