Off the back of announcing their merger and reverse takeover yesterday, the men behind what will now be Australia’s largest e-commerce group say the union will put them in the box seat to acquire and consolidate other online businesses.
Mark Bayliss, chief executive officer of Grays Australia – and now CEO of the newly created Grays eCommerce Group – and Michael Rosenbaum, co-founder of DealsDirect and current CEO of parent company Mnemon, told SmartCompany the merger was a mutual decision.
“Effectively what we’re doing is floating the Grays business through a backdoor listing with the DealsDirect guys,” says Bayliss.
“The next best option for us would have been to float Grays and that would have taken significantly longer,” he says.
“We’d known the guys from Deals for a while and we liked and respected them… We decided to get married.”
Rosenbaum agrees there is mutual respect between the brands and a compatible management style to complement the joint venture.
“We probably saw ourselves as frenemies before, and now we will be all a part of the one family,” says Rosenbaum.
Bayliss says the new business will have no debt, net cash of $10 million and an annual turnover of more than $440 million delivered by two diverse arms of the business – its B2B arm ($212 million) and B2C arm ($230 million). Combined, the business will have a warehouse space of over 60,000sqm.
“It gives us a mini war chest to effectively start growing businesses,” says Bayliss.
He says the merger will give the new business scale in the market, profitability and an increased ability to consolidate and aggregate in the online space.
“It’s a case of one plus one equals three,” he says. “If we’d just IPOed we wouldn’t have had that opportunity.”
Bayliss came from an 11-year background in private equity before recently taking on the top job at Grays and he says his focus is on creating shareholder value.
He says Grays is currently the third largest wine supplier in the country behind Woolworths and Coles, bringing to the merger an established market position.
Rosenbaum says the merger was in line with Mnemon’s strategy of playing a significant role in consolidating the online retail industry in Australia, including the recent acquisition of discount website TopBuy.
Both say the current online retail market hinges on consolidation and aggregation, which has caused a “number of players to drop off” recently.
Bayliss says a top consideration for the new entity moving forward is the acquisition of other startups.
“In the months and years ahead, there will be some interesting opportunities,” he says.
Kirsten Robb is a former journalist at SmartCompany. Previously, she worked at News Corp as a property reporter for Leader Newspapers and the Herald Sun, and holds a Masters of Journalism at Melbourne University.
