Moonpig Group PLC (LSE:MOON) said it is to acquire Smartbox group, a gift experiences platform that owns brands Buyagift and Red Letter Days, for £124mln in cash.
The deal is expected to swell Moonpig's total revenue for fiscal 2023 to around £350mln, following completion of the acquisition by end-July.
Moonpig raised its medium-term underlying profit (EBITDA) margin to 25-26% as it termed the deal margin accretive.
Smartbox, which made a £44mln revenue in its last full year, operates via two brands, Buyagift and Red Letter Days, that serve 3.3mln customers and has consistently delivered double-digit annual growth over the last decade, with a network of 4,400 partners, which "would be difficult to replicate", Moonpig said in a statement.
Over 20% adjusted EPS growth is expected in the first year.
"There is strong strategic rationale for the transaction, and compelling financial benefits," said Moonpig chief executive Nickyl Raithatha.
"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."
The rationale of the acquisition is to "unlock" the £6bn UK gift experiences segment of the £57bn total addressable gifting market, with Buyagift to be managed by its existing management as a stand-alone segment.