Why is the Kogan share price charging higher today?

The Kogan.com Ltd (ASX: KGN) share price is pushing higher on Thursday morning.

At the time of writing, the struggling ecommerce company’s shares are up 2% to $3.34.

Despite this, as you can see below, the Kogan share price is still down approximately 60% in 2022.

Why is the Kogan share price rising?

There have been a couple of catalysts for the rise in the Kogan share price on Thursday.

The first has been a strong showing in the tech sector this morning following a very positive session on the NASDAQ index overnight.

Also potentially giving its shares a lift is news that Kogan has made a new acquisition.

According to the release, the company has snapped up online luxury furniture retailer Brosa just over a week after it fell into administration. The deal will see the furniture brand stay alive and relaunched with the backing of Kogan.

Kogan has paid $1.5 million from its cash reserves. It will also provide logistics support for thousands of customers with undelivered orders.

The release explains that Kogan has purchased intellectual property, goodwill, and stock. However, the deal excludes all leases and other liabilities.

What is Brosa?

Founded in 2014, Brosa is an online luxury furniture retailer with almost 500,000 subscribers that delivers practical design-led furniture without the price tag.

In FY 2022, the business generated revenue of $75 million, largely from its online operations that were boosted by COVID tailwinds. But when these tailwinds eased and consumers returned to bricks and mortar stores, it quickly ran out of cash and was put into administration.

And despite recently being valued at over $60 million and being backed by venture capital investors such as Bailador Technology Investments Ltd (ASX: BTI), as mentioned above, Kogan was able to snap up Brosa for just $1.5 million.

While this low price tag sounds like a bargain on paper, the lack of venture capital interest is something to ponder. As is the prospect of one struggling ecommerce retailer buying another struggling ecommerce retailer. Whether this is a recipe for disaster or a masterstroke, time will tell.

Nevertheless, Kogan’s COO and CFO, David Shafer, is positive on the acquisition. He said:

The acquisition of Brosa by Kogan will broaden the online furniture offering of the Kogan Group, providing unprecedented range and value to Brosa customers, while also expanding the range of furniture and homewares available to Kogan customers. We are pleased to be able to offer a lifeline to Brosa customers, to be able to save the Brosa brand, and to relaunch Brosa.com.au very shortly. Following years of investment in brand-building and marketing, Brosa is a well known online furniture brand in Australia, and we are delighted to be able to bring the brand within the Kogan Group.

The post Why is the Kogan share price charging higher today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com. The Motley Fool Australia has positions in and has recommended Kogan.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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