A group of online retailers is set to buy media giant MediaMare, a move that could boost its ambitions to become the dominant player in online retail.
Grace MediaGroup, which is based in the US, announced on Monday that it had entered into a definitive acquisition agreement with MediaMampaign Holdings Pty Ltd, a Singapore company.
The transaction, which was first reported by The Straits Times, is valued at about US$US2 billion.
The company will acquire MediaMares assets in Singapore and Australia and will then take a 52.4 per cent stake in MediaMamampaign, a total of about US $US10 billion, according to a statement.
MediaMarry, which operates online stores including the popular Grace and the Grace Market, was founded in 2013 by two Australian entrepreneurs, David Smith and Alex Rippon, who were then working in the United States.
In 2016, the two founded the company MediaMariadry, which sold products online in China.
It is now the world’s largest online retail operator.
It said in a statement that it was grateful to MediaMamaraign for its leadership and commitment to helping Grace MediaGroups grow and deliver its online shopping experience.
“We look forward to continuing to work with MediaMeritage and its team to build a successful future for Grace Media,” the company said in the statement.
Grace is one of the largest online retailers in Australia, with more than 100 million customers.
Its Singapore-based business, MediaMarise, also has a market share of more than 8 per cent in the country, according the company’s website.
It launched its first online store in 2018 and last year it was acquired by the online retail giant Amazon for about US £1.5 million ($2.6 million).
Grace is already part of the Australian market, but will focus on expanding its footprint there.
It was one of three media conglomerates to enter the Australian online retail market last year, along with the Australian Broadcasting Corporation (ABC) and News Corp. The new deal is likely to be completed in the next six to 12 months, Grace Media chief executive Steve Darg said.
“Our goal is to be the No. 1 online retailer in Australia and globally,” Mr Darg told The Strats Times.
“The acquisition of MediaMarant is part of our broader strategy to expand our global footprint in Australia.”
He said that the two companies would continue to work together on “strategic initiatives” to “shape the future of online retail”.
The news of the deal comes as Australian media groups grapple with a decline in online sales and advertising revenue.
Last month, the Australian Communications and Media Authority (ACMA) reported a decline of 3.1 per cent from the previous year in Australia’s online sales, while the advertising revenue fell by 7.5 per cent.
This was mainly driven by declines in online video, which had a 2.4 percentage point drop, while mobile internet and social media declined by 1.4 and 0.8 percentage points respectively.
While there is no clear indication as to why online sales have declined, some commentators believe that it is down to a lack of choice in the market.
The internet has become a much less lucrative market for companies to operate in due to the introduction of the so-called “pay TV” model, in which users pay a monthly subscription fee for access to a particular service.
However, there is still a demand for high quality content.
In 2017, online shopping accounted for almost three-quarters of online revenue in Australia.
Grace said it was confident of its future in the online shopping space, adding that it would continue its growth.
The deal comes just months after Grace Media said it planned to raise US$1.4 billion from private investors in the second half of 2019.
It also announced a new investment fund for the company, and a number of initiatives to bolster its operations in the coming years.
It plans to invest US$3.3 billion in new stores, increase its digital presence, and expand into new markets in China and Europe, as well as the United Kingdom.
Read more about online retail: