Chester-based price comparison website Moneysupermarket.com has agreed to buy cashback business Quidco in a deal worth up to £101 million.
Moneysupermarket said it will pay £87 million in cash with a further £14 million deferred under the deal to acquire Maple Syrup Media, which trades as Quidco.
Quidco is the second largest cashback business in the UK, with around one million members.
“The acquisition is expected to be earnings accretive in 2022,” said the Chester company.
“Quidco delivered revenue of £59.2m for the year ending 31 July 2021, with adjusted EBITDA growing significantly year on year to £7.9m.”
Moneysupermarket also published trading results for the quarter ended September 30, 2021, showing revenues fell 10% to £76.4 million as “unprecedented energy market conditions” took their toll on the business.
The price comparison company relies on consumers switching their banking, insurance or utilities provider for its revenue.
“In July and August, wholesale energy prices continued to rise steeply, keeping customer savings at unattractively low (and often negative) levels,” said Moneysupermarket.
“The further substantial increases in wholesale prices from mid-September led to providers removing tariffs from the market, and negligible energy switching.”
Moneysupermarket added: “In insurance, competition for visitors intensified while car and home insurance markets softened.
“We continued to optimise our customer acquisition, resulting in a higher gross margin rate year on year in our main insurance channels.
“Travel insurance returned to almost half of 2019 (pre-COVID) revenue for the quarter …
“In money, borrowing conversion continued to improve and banking benefitted from further promotional deals.
“Overall money revenue for the quarter was close to 2019 levels …
“We saw some recovery in travel, weighted towards the end of the quarter. In September, TravelSupermarket revenue was at c.30% of 2019 levels …
“We have continued to deliver on our strategy to efficiently attract, retain and grow our customer relationships, building a flexible platform to support our brand portfolio.
“This has enabled us, despite the energy market conditions, to deliver a slightly higher quantum of gross profit than in Q3 2020.”
Moneysupermarket Group CEO Peter Duffy said: “Moneysupermarket Group exists to help households save money.
“Today we’ve added a broad and compelling cashback offer.
“We welcome Quidco: a profitable, successful business, with strong consumer engagement and high growth potential.
“We have experience of bringing complementary businesses into the group and helping them thrive while sharing their capabilities more widely.
“Our growing stable of well-known and trusted consumer brands will provide households with an even more compelling savings offer.
“We look forward to working with Quidco to deliver this.”
Quidco founder & co-CEO Paul Nikkel said: “As an early pioneer of cashback, Quidco has continually innovated to bring more cashback to more members.
“We are excited to continue this journey within Moneysupermarket Group which opens up more opportunities and savings for members.”
AJ Bell Financial Analyst Danni Hewson said: “Moneysupermarket’s third quarter update was the very definition of mixed but ultimately there was enough in the statement and the company’s latest acquisition to please the market.
“The comparison site relies on people switching their insurance, banking or utilities provider for its revenue.
“The current energy crisis means there are very few attractive deals for people looking to change their heating and power supplier and the failure of smaller operators has left people loath to move anyway.
“This is a problem which isn’t going away for Moneysupermarket but the good news is it pretty heavily diversified across different sectors and there was a notable recovery in the travel insurance space after a heavily disrupted 2020.
“There were signs of the ongoing cutthroat competition in the price comparison space which had a notable impact on Moneysupermarket’s car and home insurance business.
“However, deals on credit cards and other financial products seemed to be doing the trick for this part of the business with the net result that it was almost back to its pre-pandemic levels.
“The relatively modest-sized acquisition of cashback firm Quidco could have an outsized impact on Moneysupermarket.
“Quidco adds a new string to the bow for the company and Moneysupermarket should be able to use its own considerable skills and expertise to accelerate growth.”