Majestic Wines (LON:MJW) has bought online retail outfit Naked Wines and made the latter's boss the chief executive of the combined group.
Majestic Wines is paying up to £70mln for Naked Wines, of which £50mln is payable upfront.
The acquisition of Naked Wines International will see Majestic's national UK store network augmented by a strong international online presence.
The Naked Wines senior management team is staying on board and accepting Majestic shares as part payment for selling their stakes in the company, while Rowan Gormley, founder and chief executive (CEO) of Naked will take over as CEO if Majestic.
In a separate announcement, Majestic said it expects to announce adjusted pre-tax profits of around £21mln for the year just ended when the numbers are all totted up. The market had pencilled in a figure of around £22.4mln for the AIM 50 index constituent.
Investec has upgraded Majestic shares to 'buy' and said the acquisition of Naked Wines represents the sort of radical thinking it was hoping would come out of the strategic review.
The move gives Majestic growth opportunities beyond the UK, Investec noted, and both businesses have much to gain from each other.
"We expect Mr Gormley to look to unlock Majestic’s online potential, improve its CRM [customer relationship management], leverage its store network distribution and moderate store roll-out plans," the broker said.
Shares in Majestic were off 5.2% at 304p in mid-morning trading.