Grays Australia expected to list on ASX via reverse takeover

Auction group Grays Australia has merged with online shopping website Deals Direct, listing the new company on the Australian Securities Exchange via a reverse takeover.

Grays will be listed under DealsDirect parent company, Mnemon, which successfully completed a backdoor listing with DealsDirect at the start of the year, becoming the first pure-play online retailer on the ASX.

Reverse takeovers occur when a privately held company purchases a company that is listed on the stock exchange.

The  transaction  will  see  Mnemon  acquire  100%  of Grays via  a  scrip-for-scrip  offer  to  Grays’ shareholders, according to the company announcement.

Grays  shareholders  will  not  be  selling  down  their  interests  and  no  new  money  will  be  raised  in  conjunction  with  the  transaction.

The  group  will  be  renamed  Grays  eCommerce  Group  upon  completion  of  the  transaction.

Grays is the parent company of the popular Graysonline auction network, which auctions a range of goods direct from manufacturers including wine, electronics and motor vehicles.

Grays reported a $2.1 million profit after tax in 2012-13, with revenue of $120.4 million, but the new combined company is expected to have sales of around $500 million.

The group will also include online retailers Oo.com.au and TopBuy.

The move will follow a string of reverse takeovers in Australia, including health advice group Fitgenes and global roaming startup ZipTel.

Fairfax reports several of Gray’s ex-executives are aiming to go head to head with the group as they launch of a local offshoot of US liquidation giant Tiger Capital Group.