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There’s speculation the online retailer could be on the hunt.
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The Kogan.com Ltd (ASX: KGN) share price is trading in the red during afternoon trade on Monday.
At the time of writing, the share has slipped 5.35% lower and rests at $3.36 on no price-sensitive news.
In broad market moves, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) is also 64 basis points in the red today.
Whilst it’s been quiet in Kogan’s camp today, reports have surfaced noting the company might be about to hit the acquisition trail.
The online retailer is understood to potentially have fellow online player Adore Beauty Group Ltd (ASX: ABY) on its radar, The Australian reports.
Adore Beauty has a $145 million fully diluted market capitalisation and is currently priced at $1.59 per share.
After subtracting $29.7 million of cash & equivalents on the balance sheet and adding in the company’s debt of $1.17 million, it has an enterprise value of $116.4 million.
Enterprise value is more routinely used in the valuation of potential acquisitions, by taking in the entire corporate value, versus just the value to equity holders.
Adore stocks numerous leading brands and was formerly owned by Quadrant Private Equity, which retains a 32.5% stake.
If it were to theoretically buy Adore Beauty, it could stimulate a turnaround from a difficult 12 months for Kogan.
It printed a decrease in revenue from FY21 and also a $36 million loss from the year – down from a $3.5 million profit the year prior.
This, heading into a murky forward-looking climate with the prospect of uncertain inflation, and rising interest rates to combat the same.
It is not understood if there is any weight behind the potential acquisition, nor how Kogan would intend to fund the transaction.
Meantime, the Kogan share price is down more than 69% in the past 12 months, following a 61% loss this year to date.
Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com ltd. The Motley Fool Australia has positions in and has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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