Majestic Wine set to acquire rival

<p>Majestic Wine is set to purchase Naked Wines in a deal worth around £70 million.</p>

Majestic Wine is set to acquire rival Naked Wines in a deal worth around £70 million.

The agreement will allow Majestic to expand its online and e-commerce operations, something which Naked Wines has been specialising in over the years. Majestic wants to combine this level of expertise with its own network of stores across the UK. As part of the deal, Naked Wines founder, Rowan Gormley will become chief executive of the overall company.

It follows the departure of Majestic's previous chief executive, Steve Lewis, who vacated his post in February. Mr Gormley has a good track record of developing new businesses and has founded a number of high-profile ventures. He set up Naked Wines in 2008 but has been behind the launch of Virgin Wines, the Virgin ONE Account and Virgin Money.

Majestic believes that through this new partnership, it will be able to open up to new markets in the likes of the US and Australia. Entering these markets will allow Majestic and Naked Wines, which will operate as independent companies, to combine skillsets to gain extra revenue from previously untapped sources.

Mr Gormley praised the deal and 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."

Recovering share price

The deal is hoped to provide a boost to Majestic's share price, which has been steadily recovering throughout the course of Friday (April 10th). It opened on the London Stock Exchange at 290.75 but has since been slowing rebuilding and currently stands at 304.12 as of 09:53 BST.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.