GoCompare to buy MyVoucherCodes for £36.5m

Price comparison website GoCompare announced on Tuesday that it has agreed to buy MyVoucherCodes.co.uk from Monitise for £36.5m in cash, as it said 2017 operating profit is expected to be at the upper end of market expectations.

The deal, which is expected to be earnings accretive in 2018 on an underlying basis, will be financed through a combination of existing cash resources and an extension to GoCompare's existing credit facilities.

MyVoucherCodes is one of the UK's largest online voucher code sites with 8m email subscribers and a website which receives around 45m annual visits. It works with more than 3,000 retail brands and generated £350m of retailer revenue for the year ended 30 June 2017.

For the year to the end of December 2017, the business is forecast to generate revenues of £11.8m, earnings before interest, taxes, depreciation and amortisation of £4.1m and pre-tax profit of £4m.

GoCompare's chief executive Matthew Crummack said: "We are delighted with this acquisition which will complement the services offered by GoCompare. We are making strong progress towards our ambition to become the 'go-to' place for savvy savers to find great deals, and for service providers to reach and acquire customers. I am looking forward to MyVoucherCodes playing a valuable role within the group and providing us with the potential to help even more people, more often."

GoCompare also gave a very brief trading update, saying it continues to take a disciplined approach to trading and expects full-year 2017 revenue to be in the region £149m, around 5% higher than the previous year and marking an increase on the 4% revenue growth achieved in the first half.

It said continued improvements in conversion have driven an increase in the marketing margin in the second half relative to the first and adjusted operating profit for FY2017 is expected to be at the upper end of current market expectations.

RBC Capital Markets said: "Based on the financials presented in the statement, the deal looks good value to us at first glance with a price-to-earnings multiple of around 11.5x 2017E and an 8.9x 2017 forecast EBITDA multiple. We see this as evidence that the company is following a disciplined approach to making acquisitions."

It added: "There is a strong overlap between people that use price comparison websites and voucher websites and the deal should allow the company to have more regular engagement with its customer base as a result. One of the core challenges for price comparison sites is the retention of customers as there is a lack of contact with customers outside of the renewal (or claim process). This deal begins to solve that challenge in our view and should help to improve customer perception of the group in our view."

Investec said: "This looks a relatively low quality business with limited barriers to entry, though currently nicely profitable and with hopefully some synergies with the PCW business though no figures are disclosed."

At 0910 GMT, the shares were up 4.3% to 103.50p.