Woolworths, the parent company of New Zealand's Progressive Enterprises, has bought EziBuy Holdings from founding shareholders Peter and Gerard Gillespie and Catalyst Investment Managers for $350 million.
The purchase is subject to approval from the Overseas Investment Office but is likely to go ahead.
Craigs Investment Partners broker Chris Timms said companies like Woolworths were keen to take a strong position in online markets and EziBuy, which already had a presence in Australia, fitted that model.
''They have bought a proven business that has shown it knows what to do and has the formula right. Without knowing anything about EziBuy's cash flow and profit, you would have to say they are considerable given what Woolworths has paid for it.''
Woolworths was a top 10 listed Australian company with a business model of volumes and margin, he said.
It was likely Woolworths would adopt and expand the EziBuy model throughout its online network.
A price of $350 million was not a large outlay for a company with market capitalisation of $A42 billion ($NZ48.2 billion), Mr Timms said.
Woolworths group director of retail services Penny Winn said in a statement the company was keen to invest in the next phase of EziBuy's growth and believed the combination of the two companies would boost its its own online capabilities.
Progressive already employed more than 18,500 in New Zealand and EziBuy employed 500. Currently, 68% of EziBuy's sales were to the Australian market.
''With a history of profitable growth and more than $NZ200 million in sales over the past financial year, and 550,000 loyal customers across Australia and New Zealand, the business has been an enormous success in its own right.''
Woolworths was also seeking to learn from EziBuy's direct-to-customers logistics at Palmerston North and apply those lessons more broadly across the business, Ms Winn said.
