Wesfarmers shares ended up 1% in yesterday’s big sell-off on the ASX after the competition regulator greenlit Wesfarmers’ acquisition of online retailer Catch Group for $230 million.
The deal was announced in mid-June, pending the approval from the ACCC.
That came before trading yesterday morning and helped Wesfarmers shares weather the near 2% sell-off in the wider market on fears Donald Trump is going to do more damage to the global economy and especially Australia with his escalation of his trade war with China.
The Catch Group deal is planned to help Wesfarmers’ Big W and Kmart department store chains improve their online performance in the face of growing competition from the likes of Amazon and a host of local rivals.
“The current growth in online marketplaces is fostering competition between providers, and feedback indicated that Wesfarmers’ proposed acquisition of Catch would be unlikely to change that level of competition,” the ACCC’s Commissioner Stephen Ridgeway said in yesterday’s statement.
“Stakeholders also consistently told us that Catch and Wesfarmers are not close competitors, primarily due to the differences in their business models.”The review looked into both physical and online retail competition, along with assessing the potential effect on third-party marketplace sellers using the platform.
“We reviewed whether Wesfarmers’ retail position could be leveraged into online sales and marketplaces in an anti-competitive way,” Mr Ridgeway said.
“The current growth in online marketplaces is fostering competition between providers, and feedback indicated that Wesfarmers’ proposed acquisition of Catch would be unlikely to change that level of competition.”
Wesfarmers shares rose 1% to $3925, just above the $38.29 the shares were at in June when the deal was announced.
