Moonpig today says it plans to acquire the Buyagift business for £124m as part of its strategy to offer a growing range of gifts that will include experiences alongside physical presents if the deal goes ahead.
Moonpig’s roots are in offering personalised cards and it has recently expanded the range of physical gifts that it offers on its website by working with partners from Virgin Wines to Cath Kidston. Now it says the proposed acquisition of Buyagift parent company the Smartbox Group represents a step-change for the Moonpig business, taking it into a £6bn, fast-growing segment of the £57bn UK gift market. As a result, it will be able to offer same-day gift delivery via digital, as well as using its own data to offer “highly relevant gift recommendations across thousands of new products” – from hotel stays to days out, meals and activities.
The Smartbox Group currently has 3.3m customers for two brands – Buyagift and Red Letter Days, and relationships with more than 4,400 partners. Moonpig says the acquisition offers a further network effect, since when recipients redeem their presents they will be brought into the Moonpig system, with the potential to convert them into customers. It says that Moonpig will be able to recommend bespoke gift experiences to some 13m existing customers every time they buy, using data such as location to find the right experience. Shoppers will be able to print gift vouchers alongside their personalised card, or send same day as an e-card.
Buyagift currently sells online as well as via 2,500 retail points of sale in third-party shops and via B2B channels.
Moonpig Group chief executive Nickyl Raithatha says: “The proposed acquisition of Buyagift rapidly accelerates Moonpig Group’s journey to become the ultimate gifting companion. There is a strong strategic rationale for the transaction and compelling financial benefits. Buyagift is profitable and highly cash generative, with a proven track record of strong growth and we are excited by the ways that we can further transform the business using the group’s proven playbook. We see significant potential for the cross-selling of gifting experiences to Moonpig Group’s loyal customers. We look forward to working with the Buyagift team to deliver an enhanced proposition for our customers and to create value for our shareholders.”
Moonpig says in today’s announcement that if the acquisition is completed by the end of July, it expects full-year 2023 Moonpig revenue to come in at about £350m. In the year to April 2022, the Buyagift business turned over £44m while adjusted EBITDA (earnings before interest, tax and asset writedowns) came in at £14m, although both figures are unaudited. Moonpig would aim to grow revenue in its new gift experiences business while raising profit margins to between 25% and 26%.
Moonpig is ranked Top250 in RXUK Top500 research.