Traditional Retailers Race to Online Drives eCommerce ValuationsPosted: March 24, 2011
I just read about Walgreens acquisition of Drugstore.com for over $400mm. Wow.Traditional retailers are really feeling left behind in the race to online…this is happening more and more often. Not too long ago Morrisons, the UK supermarket group, acquired Kiddicare and snapped up a minority stake in FreshDirect, the US online groceries retailer. While this is a natural move for companies that have traditionally operated in the offline world (and do not have a clue about online), it is also driving valuations of eCommerce businesses through the roof, literally.
These are some multiples I have calculated based on public info:
- Drugstore.com, at $409mm enterprise value, is being valued by Walgreens at 25x 2010 EBITDA and 22x 2011 projected EBITDA
- Kiddicare, at £70mm, was valued by Morrisons at well over 20x 2010 EBITDA
- ASOS trades at over 30x 2011 forecast EBITDA!
- Ocado trades at 30x 2011 forecast EBITDA
I would love to see a chart of eCommerce multiples pre dotcom crash..I bet they were not that far away from what we are seeing in the market these days (if you have a source, please send me the link!).
UPDATE: some useful data on Ben Horowitz‘s blog, which compares multiples now vs. the dotcom bubble. The answer is: we are not in a bubble! yet.