Australian retailer Wesfarmers boosts online presence with Catch buy

Industry:    June, 2019

Australia’s Wesfarmers Ltd said on Wednesday it has entered into an agreement to buy online retailer Catch Group Holdings Ltd for A$230 million ($159.9 million) in its bid to stave off competitors in the e-commerce space.

At a time when global giant Inc is ramping up its operations in Australia, retail conglomerate Wesfarmers had to resort to steep discounting to keep shoppers from switching allegiance.

Wesfarmers, which spun out its slow-growth supermarket group Coles Group Ltd in November, will be trying to attract online customers with the Catch Group acquisition.

Wesfarmers shares rose as much as 0.6% to a record high of A$38.80 in early trade, in line with the broader market’s 0.5% rise.

As reported by the Australian Financial Review, Catch Group has seen its gross transaction values rise 62% to A$254 million in the six months ending December, while its active customer base surged more than 50% to 1.37 million during the period.

Catch Group management has said it has benefited from the launch of Amazon’s Australian site in late 2017, with more customers shifting to online shopping as a result.

Wesfarmers said that, subject to completion, Catch Group will operate as an independent business unit under Ian Bailey, the managing director of Kmart Group, Wesfarmers’ low-priced retail chain, and the acquisition will be funded from its existing debt facilities.

Retailers in Australia have come under increasing pressure as a combination of rising household debt, tepid wage growth and a steep property downturn has subdued consumer spending.

In its bid to diversify beyond the retail business, Wesfarmers has bid for lithium miner Kidman Resources Ltd and rare-earth producer Lynas Corp Ltd.