After 26 years of hard graft, iconic Kiwi online marketplace Mighty Ape has changed hands.
ASX-listed Kogan.com on Thursday announced it had acquired 100 per cent of Mighty Ape shares for A$122.4 million ($128.3m), payable in four tranches.
Founder Simon Barton will stay on as chief executive of the organisation until at least 2022 when the company delivers its FY23 financial results.
Mighty Ape has more than 895,000 subscribers and in the 12 months to September generated more than A$120m in revenue and gross profit of A$37.8m. For the current financial year ending March 31 2021, the retailer is forecast to earn A$14.3m in operating earnings from revenues of A$137.7m.
Kogan.com chief operating officer and chief financial officer, David Shafer, told the Herald Kogan had been "tracking Mighty Ape" for more than a year, observing how it had "evolved as a business".
Shafer said the acquisition would accelerate both brands' growth across the Tasman.
"Mighty Ape has a fantastic brand, market-leading customer service and delivery and Kogan has a lot of the infrastructure and expertise that's required to take Mighty Ape to the next level," Shafer told the Herald.
"We're looking to retain and preserve everything that makes Mighty Ape what it is today, which is a hugely successful iconic online retailer, and also contribute some of our expertise to further scale the business from here, including a significant expansion of the product range, and marketing and logistic opportunities, all of which will benefit consumers."
Mighty Ape launched in the 1990s, originally as Gamezone with bricks and mortar stores, and in the early 2000s began extending its product range to DVDs, computer hardware, music and books. It became an e-commerce-only retailer in 2008 after a major rebrand.
Shafer said the acquisition would enable Mighty Ape to grow its customer base in Australia, including by opening warehouses across the ditch to enable overnight and same day delivery.
"We're looking to expand it both in New Zealand and Australia," he said, adding that now the deal was settled it would soon begin planning for expansion.
Kogan has 14 warehouse fulfilment centres across Australia, and Mighty Ape currently has one 10,000 sqm site based in Silverdale, which it moved into in 2018.
"Kogan is growing triple digits at the moment, Mighty Ape is growing really fast, we need more capacity for warehousing," he said.
Shafer said it was too soon to say how many Mighty Ape warehouses would open in Australia, or whether the South Island in New Zealand would get one. "Those details are all part of a piece of work that will be undertaken in the coming weeks and months as we look to extract synergies and grow together."
Kogan already has operations in New Zealand after buying Dick Smith's online presence and email database in 2016 and merging it with its own online service, then launching the cut-price Kogan Mobile on the back of a wholesale deal with Vodafone NZ last year.
Kogan.com is listed on the Australian Stock Exchange and one of Australia's leading retailers, with a market capitalisation of $1.7 billion and more than 2.6 million active customers, specialising in private label products including white goods, consumer electronics, furniture and power tools. It also has a portfolio of insurance businesses.
As part of the acquisition, Shafer said Kogan branded products would be sold through Mighty Ape.
Kogan is in expansion mode and would continue to look for brands to acquire, he said.
Barton, who was the company's largest shareholder, told the Herald he hoped the retailer would continue to grow to become a household name in New Zealand, and eventually "one of the largest retailers in the country".
The past 26 years had been "a labour of love", Barton said, and he was confident the brand was in good hands to prosper in the future.
He said he would mark the sale with his partner Vicki with a few quiet celebrations with friends and family.
In an email to Mighty Ape staff yesterday, Barton reflected on starting the business in his 20s and the company's "humble beginnings".
He said Mighty Ape was now at a size where he needed to "secure the company's long term future" and ensure that it had "the backing and access to the expertise required to continue to grow strongly".
"We've been on the lookout for the right partner and we've finally found one. Overnight the shares of Mighty Ape have been acquired by Kogan.com," Barton said.
"It's always been important to us to work with like-minded people - who are driven and forward-looking, embrace technology, and who share our passion for the internet and putting customers at the heart of decisions. Kogan.com deeply understands e-commerce and is a great match for us, and secures Mighty Ape's long-term future as New Zealand's leading online shopping site.
"Moving forward it will very much be business as usual. I will continue to lead the company as Chief Gorilla for years to come, and Kogan.com is backing each of us to continue running the business. With this deal, we will have access to the resources and capabilities of a large, sophisticated and high-performing e-commerce group, as well as the opportunity to improve our governance, compliance and general business capabilities. At the same time, we will keep the best aspects of the culture that we have all fostered over the years."
He ended the email by saying Mighty Ape was just getting started.