Australian Woolworths offers to buy majority stake in

(Reuters) – Australia’s Woolworths Group on Friday offered to buy an 80% stake in online retailer, as it seeks to take on major internet retail giants operating in the country which includes

The A$217.4 million ($152.88 million) deal involves Woolworths paying A$1.05 per MyDeal share – a nearly 63% premium to the stock’s last close Thursday. MyDeal shares jumped around 57% and were on track for their best day ever.

The proposed takeover of MyDeal, one of Australia’s largest internet retail companies, aims to help Woolworths better compete with Amazon in the country, where it already has rivals at major discount stores Kmart and Target, stationery supplier Officeworks and hardware chain Bunnings – all selling products that are also sold on Amazon.

“The program is an attractive transaction, which provides an all-cash option to MyDeal shareholders,” MyDeal Chairman Paul Greenberg said in a statement. In addition, its board of directors also recommended that shareholders vote in favor of the takeover.

Almost 60% of the shares sold to Woolworths will come from the stake of MyDeal CEO Sean Senvirtne. He will also own the remaining stake in the company.

Barrenjoey analysts said in a note that the acquisition appears to be a tacit acknowledgment that Woolworths’ market is not gaining traction.

“Woolworths has struggled to generate returns in non-food businesses, so we wonder why they would allocate capital in this way.”

($1 = 1.4221 Australian dollars)

(Reporting by Navya Mittal in Bengaluru; Editing by Uttaresh.V)