Smartbox operates through two brands, Buyagift and Red Letter Days, and is the biggest gift experience platform in the UK with 3.3 million customers and 4,400 partners. 

Moonpig said the deal would deliver a “step-change” in Moonpig’s gifting offering, giving the PLC access to a growing £6bn market.

It said it would unlock the potential for digital delivery of gifts via ‘gift-in-a-card’, and the same-day gifting market.

In the pandemic-impacted financial year to 30 April 2021 Smartbox Group posted sales down 25% at £29.1m, while operating profits fell by 41% to £8.95m.

However, Moonpig said the unaudited figures to April 2022 showed EBITDA had bounced back to £14m on turnover of £44m.

CEO Nickyl Raithatha said the proposed acquisition would rapidly accelerate Moonpig’s plans to become “the ultimate gifting companion”. 

“There is strong strategic rationale for the transaction, and compelling financial benefits. Buyagift is profitable and highly cash generative, with a proven track record of strong growth and we are excited by the ways that we can further transform the business using the group's proven playbook,” he said. 

“We see significant potential for the cross-selling of gifting experiences to Moonpig Group's loyal customers. We look forward to working with the Buyagift team to deliver an enhanced proposition for our customers and to create value for our shareholders.”

Moonpig also said that it expected the deal to boost margins, and was raising its target for adjusted EBITDA margin to 25%-26%. Full year 2023 revenue for the enlarged group is estimated at £350m.

At the half-year gifting had grown to 48% of sales. 

Moonpig’s share price rose by 8.34% to 254.60p in early trading following the news. 

The deal is subject to regulatory clearance and is expected to be completed by the end of July. 

The buy will be funded through cash on Moonpig’s balance sheet and £60m of additional revolving credit facilities through some of the group’s existing lenders, as an extension to its existing Senior Facilities Agreement.

Moonpig Group, which includes Greetz in the Netherlands, expects to post sales of around £300m for the financial year just ended when it announces its results at the end of June. 

Underlying sales excluding the temporary uplift caused by Covid restrictions are £265m.