Allegro to acquire Mall Group a.s., a leading e-commerce platform across Central and Eastern Europe
- The planned combination of Allegro, Mall Group and WE|DO will strengthen the companies’ joint status as a leading marketplace platform for CEE customers and merchants.
- The joint group’s 135k merchants in Poland and across Eastern Europe will benefit from the ability to ‘list once, sell everywhere’ and gain wider access to a PLN 1.14 trillion addressable retail market (TAM) of 70m people.
- The tie-up will improve the shopping experience and provide the best prices, broadest offer selection and maximum convenience for an 18m-strong combined customer base across the region.
- The combined team of ~7,200 people shares a consumer-oriented and innovation-focused culture and will enjoy enhanced career opportunities in a vibrant, international workplace.
- The deal is a significant step for Allegro in its strategy of international expansion and will allow the soon-to-be joint group to accelerate growth across Europe.
- The transaction is subject to the customary antitrust and regulatory approvals and is expected to close in H1 2022.
Warsaw, November 4, 2021 – Allegro, the most popular shopping platform in Poland and one of the world’s top ten e-commerce websites, today announces that it has agreed to acquire 100% of Mall Group a.s. (‘Mall Group’) and WE|DO CZ s.r.o. (‘WE|DO’) from selling shareholders PPF, EC Investments, and Rockaway Capital Mall Group and We|Do will be acquired for a price amounting to EUR 881 million, based on a firm valuation of EUR 925 million adjusted for debt and debt like items of EUR 44 million. The final price might be increased by a price adjustment of up to EUR 50 million based on specific short-term objectives.
The acquired business comprises the e-commerce assets of Mall Group and the logistics assets of WE|DO based across the Czech Republic, Slovakia, Hungary, Slovenia, Croatia and Poland. In FYE Mar-21, Mall Group achieved GMV of PLN 4.3bn, gross margin of 14% and EBITDA breakeven. The transaction value equates to ~1.0x LTM Mar-21 GMV and ~7.2x LTM Mar-21 Gross Profit.
François Nuyts, CEO of Allegro, says:
“Over two decades, Allegro has become the favourite shopping destination for consumers in Poland. Together with Mall Group and WE|DO we will now be able to improve the everyday lives of not only the 18m customers we already serve, but also reach out to the rest of Europe with our offer. Buyers will benefit from the improved selection, price, and convenience, while a joint base of around 135,000 merchants will be able to ‘list once, sell everywhere.’ As Allegro we have already developed the region’s best and most competitive offer selection, and we’re advanced in preparing our platform to support multiple languages and help merchants in selling abroad. With the Mall Group’s business included, our joint presence in Poland, the Czech Republic, Slovakia, Slovenia, Hungary, and Croatia - equivalent to over PLN 1.1 trillion and over 70m people - will also be the basis for creating a strong, international team in tech, e-commerce and logistics. This will allow us to attract new talent, offer new career opportunities across the enlarged group, and build an even more vibrant and diverse organisation.”
Joining forces to create a pan-CEE e-commerce leader
The tie-up between Mall Group and Allegro will establish a leading region-wide e-commerce platform, bringing a range of popular brands – including Mall, mimovrste, czc.cz, WE|DO and of course Allegro, Ceneo, eBilet, and One – under one roof. The joint platform’s clients will be able to take advantage of the Smart! programme as well as many loyalty benefits like free deliveries, fintech products Allegro Pay, or access to the B2B platform. At the same time, merchants will gain access to a seamless selling experience, innovative solutions or advertising products.
The transaction nearly doubles the group’s total addressable market in countries with highly attractive fundamentals and growth potential. The combination will also enable efficient international merchants’ sourcing and onboarding as well as support new clients’ acquisition. Deploying Allegro’s 20-year+ marketplace experience will also allow it to improve margins and build additional revenue streams to support the joint groups’ further development.
Ultimately, the expansion of the platform will enable Allegro to create a best-in-class proposition for customers and merchants in Poland and beyond, accelerating its flywheel in Poland across the entire CEE region.
Jakub Havrlant, Chairman of the board of Mall Group, CEO and founder of Rockaway Capital, comments:
“After more than seven years of building a strong e-commerce position in the Czech Republic and in the CEE region, I’m delighted that we have found such a strong partner for further development of the Mall Group and WE|DO as Allegro. In Allegro, we recognise a partner with a similar focus on innovation, growth and a complementary culture. We also see a range of compelling synergies across our platforms and scope for significant acceleration of numerous projects already in place. As a Rockaway Capital shareholder, I’m glad that we remain part of the story and, as shareholders in the combined group, will participate in further growth. We believe that e-commerce still has great growth potential in Central and Eastern Europe, and I’m very much looking forward to further cooperation.”
Jan Hanuš, CEO of Mall Group, adds:
“We are incredibly excited about the prospects before us. Our business model fits perfectly to a group operating such a large marketplace and on top of this, we offer access to a large last-mile infrastructure and operations across the countries we operate in. We have also started to grow our 3P business and are looking forward to taking advantage of Allegro’s unrivalled expertise in this field. Both us and Allegro are home-grown CEE champions that understand local consumers’ needs better than anyone else. Combining our strengths, we’ll have a full package ready for customers and merchants in six Central European countries. I’m also excited for our teams. I see how our cultures fit, that we share the innovative, consumer-facing attitude, and that we’ll have the greatest talent pool in the region.”
Combining Mall Group’s deep regional knowledge and delivery expertise with Allegro’s 3P marketplace know-how
Mall Group has built some of the leading e-commerce businesses in the CEE region, combining a large customer base, strong traffic, highly popular consumer brands, and experienced cross-country teams. The transaction will give the group access to Mall Group and WE|DO’s cross-border fulfilment and last-mile logistics infrastructure, while Allegro brings in its 3P marketplace expertise and state-of-the-art technology to accelerate joint growth. The two companies’ advantages will thus be leveraged to the full, helping build a truly international business flywheel, based on the know-how from the joint teams . As Allegro will strengthen Mall Group’s 3P business, we also expect to see growth in Mall Group profitability through significant increase in offer selection and transaction frequency.
The transaction will be financed through a combination of stock and cash consideration comprising a ca. 53.7% cash consideration, financed with cash on hand and new debt, and a ca. 46.3% stock or cash consideration. Allegro has the discretion to either issue stock to Mall Group selling shareholders or raise incremental cash consideration. Allegro pro-forma leverage post-transaction is expected not to exceed 3.0x by the end of H1 2022. The closing of the transaction is subject to the customary antitrust and regulatory approvals and is expected to close in H1 2022. It will be one of the largest transactions in the CEE when finalised.
J.P. Morgan acted as exclusive financial advisor, Clifford Chance served as legal counsel to Allegro for this transaction. Morgan Stanley worked as an exclusive financial advisor and White & Case as a legal counsel for the Mall Group and its shareholders.
The company will host a Zoom Webinar Call with the media on Friday, Nov. 5 at 11:30 Warsaw time. Please dial in under this link (ID: 946 6248 0523; Pass: 846659).
A Zoom Webinar Call for analysts and investors will be held also on Friday, Nov. 5 at 10:00 Warsaw time. Please reach out to Allegro IR Team for registration link at firstname.lastname@example.org.
For more details related to the announcement of the proposed acquisition, please see the presentation materials and current reports released November 4, 2021, available on the investor relations website of the company (www.allegro.eu), or contact our IR at email@example.com and media relations at firstname.lastname@example.org.
About the Allegro Group
Allegro is the go-to e-commerce platform for Polish consumers and has delivered strong revenue growth, profitability and cash flow at scale. The group operates a leading online marketplace in Poland, Allegro.pl, and a price comparison platform Ceneo.pl. As the most recognized e-commerce brand and the largest non-food retailer by GMV in Poland, Allegro.pl is also one of the world’s top ten e-commerce websites and ranks among top 100 websites in the world by visits per month. Merchants on the Allegro.pl marketplace sell across a variety of categories, covering electronics; home and garden; sports and leisure; kids; automotive; fashion and shoes; health and beauty; books; media; collectibles and art; and supermarket. The Allegro.pl platform facilitates sales of new products primarily on behalf of merchants through a business-to-customer model and attracts visits from an average of 21 million users per month, which is equivalent to 66% of Polish residents aged 16 and above and 78% of all internet users in Poland.
About MALL Group
MALL Group is the biggest e-commerce group in Central and Eastern Europe. Its portfolio combines four main areas: traditional e-commerce (MALL, CZC.cz and Vivantis) and financial services MALL Pay for internet shopping. With more than four thousand employees, MALL Group operates in nine countries and offers its services to the 130 million residents of Central and Eastern Europe. In 2020, it delivered more than 14 million orders to its customers. Mall Group’s vision and goal is to become the number-one destination for e-shoppers, which means it will be the first place most people go when shopping online. It is co-owned by Jakub Havrlant’s Rockaway Capital investment group, PPF Group, and Daniel Křetínský’s and Patrik Tkáč’s EC Investments. The Rockaway Group is the controlling shareholder.
WE|DO deliver is a last mile delivery expert, that currently cooperates with 300 couriers, operates 1,000 WE|DO pickup points, and offers 100 boxes in the Czech Republic and Slovakia. Its long-term ambition is to maximally adapt the last mile delivery service to consignees and their needs.
About PPF Group
PPF Group operates in 25 countries, investing in multiple sectors, including financial services, telecommunications, media, biotechnology, real estate, and engineering. PPF Group’s reach spans from Europe to North America and across Asia. The Group owns assets to the value of EUR 40.3 billion and employs 80,000 people globally.
About EP Investment
EC Investments (ECI) is co-owner of the leading regional e-commerce platform Mall Group (40%). ECI is also co-owner of the #1 comparison shopping destination Heureka Group. Group is active in the online grocery delivery segment via Kosik.cz. ECI is part of the EP Corporate Group, which is controlled by Daniel Křetínský. EP Corporate Group holds 56% in ECI, while the remaining 44% is controlled by Patrik Tkáč.
About Rockaway Capital
Rockaway Capital is a private equity and venture capital group founded in 2013 by Jakub Havrlant with a vision of building on the foundation of new technologies and the digital economy to disrupt traditional business models. Nowadays Rockaway is a leading Central European strategic internet investor with assets in 17 countries and an investment portfolio which is currently generating sales in excess of € 2.5 billion. Rockaway invests into local leaders and high growth ventures in the digital economy across e-commerce, online grocery, last-mile logistics, comparison shopping, e-travel, fintech, media, blockchain and other digitally-enabled sectors with operations in the DACH, CEE and Balkans regions.
 The share purchase agreement has been concluded by and between Allegro.eu and Allegro.pl as the buyers and the following entities as the sellers: (i) EC Investments a.s . (owning 40% of the shares in Mall Group a.s .), (ii) BONAK a.s . (owning 40% of the shares in Mall Group a.s .), entity belonging to the PPF capital group, (iii) Rockaway e commerce a.s . (owning 20% of the shares in Mall Group a.s .), and (vi) Titancoin International a.s . (owning 100% of the ownership interest in WE|DO CZ s.r.o .), entity belonging to EC Investments (40% of shares), PPF capital group (40% of shares) and Rockaway capital group (20% of shares)
 Defined as Gross Profit as % of GMV. Financials converted from EUR to PLN at EUR1 = PLN4.6208 as of 29-Oct-2021