Target to acquire grocery-delivery company Shipt in $550 million cash deal
Target Corp. said Wednesday that it has agreed to acquire Shipt, an online same-day grocery delivery company, for $550 million in cash. The deal is expected to close before the end of 2017. Target shares are up 1.6% in Wednesday trading. Target expects to make same-day delivery service to guests at about half of the company's 1,834 stores by early 2018 and at the majority of stores before the 2018 holiday season. By the end of 2019, same-day delivery will include all major merchandise categories, the company said. Shipt was founded in Birmingham, AL in 2014. A membership-based grocery marketplace that uses a network of more than 20,000 personal shoppers for same-day delivery, Shipt will become a wholly-owned subsidiary of Target and continue to operate independently. Shipt's Chief Executive Bill Smith will continue in his role, reporting to Target's Chief Operating Officer John Mulligan. All employees will continue to work from offices in Birmingham and San Francisco. The acquisition is a credit positive for Target, according to Moody's lead retail analyst Charlie O'Shea. "While it will not affect Target's capability this holiday season, the fact that Target will have this service in place during 2018 will significantly improve its online competitive position as the service is integrated and rolled out to customers," said O'Shea. "This is yet another example of a brick-and-mortar retailer leveraging its physical assets to improve its online offerings." Target's stock is down 20.2% for the last year while the S&P 500 index is up 17.6% for the period.
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