The Mad Paws Holdings Ltd (ASX: MPA) share price is surging higher today after the pet services marketplace announced it is acquiring Waggly Club.
At the time of writing, the Mad Paws share price is trading hands at 19 cents, up 11.8%.
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What's lifting the Mad Paws share price?
Investors have been scrambling to buy shares in the pet services company today following its announcement this morning.
According to the release, Mad Paws has entered into a binding agreement to acquire Waggly Club. The company being acquired is described as "one of Australia's largest dog treats and toys subscription businesses"
Waggly was launched by founder Kate Herbert in 2016, providing dog owners with an assortment of treats and toys monthly. These subscription boxes range in value from $45 to $52 per month and are tailor-made based on the dog's age, chewing needs and size.
Waggly's founder and CEO, Kate Herbert stated:
As we look to our next horizon, my aim is to scale Waggly and reach more and more dogs and their fur parents each month. To this end, I feel Mad Paws and Waggly are a perfect match.
The details
Mad Paws has agreed to acquire 100% of Waggly Club through a combination of cash and shares. Total cash consideration of $2 million will be paid upon completion of the acquisition, along with $1 million worth of Mad Paw shares. The issuing Mad Paws share price will be at 25 cents per share.
Furthermore, another $0.5 million will be payable dependent on Waggly Club achieving agreed revenue-based performance hurdles up until 31 December 2022.
Regarding Waggly's financial performance, the company currently serves roughly 2,000 orders per month. Around 70% of the company's revenue is subscription-based. From Fy20 to FY21, Waggly nearly doubled its revenue to $1.5 million.
The Waggly Club acquisition is not subject to conditions and is expected to be completed today, 8 June 2021.
