No-frills reseller MSY is set to be acquired by soon-to-be-former mining company Lanka Graphite Limited.
The two companies have discussed the transaction since August 2018, when Lanka Graphite issued an ASX announcement (PDF) proposing a price of $17.5 million and outlining a series of financial and regulatory steps to be taken to make the transaction happen.
In December 2018 Lanka Graphite's annual report explained why it wants MSY: the company plans to exit the mining business and pivot to e-commerce. MSY’s national network of 28 stores, plus its online presence, are its chosen vehicle to do so.
The transaction moved ahead in March 2019 (PDF) when due diligence was completed and the two companies revealed they were working to finalise binding share purchase agreements.
And on Friday 5 July, Lanka Graphite announced (PDF) that those agreements have been signed and the transaction is rumbling forward.
Shareholders still have to sign off on the transaction and there’s plenty of legal and regulatory niceties to be performance.
But before long Lanka Graphite will take over MSY, creating a $100m listed entity focused on IT retail!
What Lanka Graphite does with MSY will be fascinating to watch. MSY famously takes a minimalist approach to customer service, online and in-store, and seemingly focuses on system builders. That formula has delivered one of Australia’s larger retail chains and propelled it to $100m in annual sales, despite the MSY shopping experience being rather less sophisticated that offered by many direct rivals, and many more e-tailers in other fields.
MSY has built a new and more functional web site, a beta of which is not slick as rivals', which we mention as Lanka Graphite’s most recent annual report mentions a “pivot” into “retail e-commerce” but does not specify restricting itself to MSY’s current IT business.