What could it mean if Oda and Mathem merged - three alternatives
Many news outlets reported how Breakit.se broke out the rumor that investor Kinnevik would be in talks to merge its two online grocery pure-players, Oda and Mathem. From the perspective of Kinnevik, this would make sense as the company has been a significant investor in both companies for years.
Oda and Mathem have seen difficult times lately with the rising price competition and a more difficult funding environment. Oda had to close down its operations in both Finland and Germany. On the other hand, Mathem has seen both revenues and profits decline.
What would the merger mean for these companies and the online grocery markets in general in the Nordics? Three possible scenarios.
#1 Two separate companies operating with their own brands
In this scenario, both companies would continue operating with their established brands. There would be little change. One would question why there would be a need to combine the companies in this scenario.
There might be some synergies in sharing knowledge and maybe integrating head office operations. Still, there would probably be a need to have local offices in both countries for sourcing, logistics, and other local activities.
There might be some possibilities to integrate logistics and combine forces in some parts of southern and western Sweden (between Gothenburg and Oslo). However, those benefits would probably be quite limited.
#2 Merging the companies under one brand and leadership
In this scenario, the companies would be merged into one company. This would lead them to operate under one single brand. That would mean either one or both brands would cease to exist. Mathem is already a relatively well-known brand in Sweden (especially in the Stockholm region). On the other hand, both brands are very young, and it would not be too big of a task to replace the brand in the customers' minds.
Oda is somewhat stronger financially (better revenue growth and closer to profitability) and more highly valued than the two companies. Thus, in this scenario, one could imagine that the head office and other activities would be centralized in Oslo. That would probably lead to more cost savings synergies and make it easier for both companies to take the best practices.
However, this would open the question around the sourcing partners for both companies, Rema and Axfood. Which one would remain the leading sourcing partner for the combined company, and would both continue as investors in the combined company?
#3 Axfood buys out both
The most exciting scenario is that the Swedish grocery giant Axfood would buy out both companies. Axfood is already the second biggest owner in Mathem. This move would enable Axfood to turn the combined company into its online grocery home delivery arm. This would leave the store-based picking only for the click-and-collect service.
Also, this would enable Axfood to expand from Sweden to Norway. The company already sells to Norwegian customers from its border-side stores. However, they are located in Sweden.
With the efficient logistics of Oda, Axfood could accelerate its move online and surpass ICA as the biggest Nordic online grocer. If Axfood were to acquire both companies, it would also give them the possibility to expand to Finland
The company has in the past operated in Finland but exited the country during the early 2000s. With the Oda warehouse, Axfood could quickly start experimenting in Finland.
However, that would be a relatively expensive endeavor and require a very long perspective from Axfood. On the other hand, Finland has a huge potential for an international player to become a fourth alternative among the S group, Kesko and Lidl. Online would most probably be the most efficient way to enter the country.