In a formal statement the wine warehouse chain said it had acquired Naked Wines, a customer funded international online wine business, to create an "international, multi-channel specialist wine retailing group".
The deal is worth up to £70 million, which includes approximately £50 million payable on completion in cash, plus up to £20 million contingent consideration payable in Majestic's ordinary shares. Cash consideration is being funded by new debt facilities.
Rowan Gormley, founder and CEO of Naked Wines has been appointed as CEO of the enlarged Majestic. The Naked Wines senior team will remain with the business and will receive more than 70% of their potential consideration in Majestic's ordinary shares, which will all be subject to performance criteria.
Majestic says the transaction “creates a significant strategic opportunity for both businesses by sharing complementary strengths: Naked Wines' online and e-commerce skills and Majestic's national store network. The transaction also opens up attractive international growth in the USA and Australia. Majestic and Naked Wines will continue to operate as independent brands.”
It says Naked Wines has an excellent growth track record. For the year ended December 31, 2014 sales of £74 million, were up 40% year on year, with an EBITDA loss of £3.3 million. It currently has over 300,000 customers funding over 130 winemakers, underpinned by large and growing wine markets.
Majestic expects to announce adjusted pre-tax profit of approximately £21 million for the year ended March 31, 2015.
Majestic chairman, Phil Wrigley said: "The acquisition of Naked Wines represents a transformational deal. The two businesses have significant strengths which are very complementary. Majestic's distribution skills, a nationwide UK store network and customer service orientated knowledgeable staff, are a perfect fit with Naked Wines' unique sourcing and selling model.
"This acquisition will significantly accelerate the planned development of Majestic's online capabilities whilst providing Naked Wines with a nationwide store network to allow a Click & Collect delivery option for its customers. In addition, this acquisition opens up attractive international markets, increasing our potential customer reach eightfold.
"I am delighted that Rowan has agreed to be the new CEO for the enlarged Majestic. He has a fantastic track record as a successful businessman, innovator and entrepreneur in the wine industry and beyond. He has also assembled a deep pool of talent at Naked Wines with a similar culture to Majestic."
Gormley, who used to head up Virgin Wines before it was bought out by Direct Wines, said: "The combination of Naked Wines and Majestic provides the very exciting opportunity to build a world class wine retailer, serving customers who are looking for inspiration that the supermarkets cannot provide. This is great news for the customers, staff and suppliers of both businesses and will ultimately create significant shareholder value."