Australia’s Woolworths offers to buy majority stake in

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The A$217.4 million ($152.88 million) deal involves Woolworths paying A$1.05 per share of MyDeal — a near 63% premium to the stock’s last close on Thursday. MyDeal’s shares surged about 57% and were on track to see their best day ever.

The proposed buyout of MyDeal, one of Australia’s largest internet retail businesses, aims to help Woolworths compete better with the likes of Amazon in the country, where it already has rivals in discount department stores Kmart and Target (NYSE:TGT), stationery vendor Officeworks and hardware chain Bunnings — all selling goods that are also sold on Amazon.

“The scheme is an attractive transaction, which provides an all-cash option for MyDeal shareholders” MyDeal Chairman Paul Greenberg said in statement. Separately, its board also recommended shareholders to vote in favour of the buyout.

Almost 60% of the shares being sold to Woolworths will be from MyDeal’s Chief Executive Officer Sean Senvirtne’s stake. He will also hold the remaining interest in the company.

Analysts at Barrenjoey said in a note that the acquisition looks to be a tacit acknowledgement that Woolworths’s marketplace isn’t gaining traction.

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

($1 = 1.4221 Australian dollars)