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Target acquires same-day delivery startup Shipt for $550m

Target acquires same-day delivery startup Shipt for $550m

Mubasher: The Minnesota-based Target Corporation agreed to purchase grocery-delivery startup Shipt for $550 million in an attempt to double its efforts to compete with Amazon.com Inc. and Wal-Mart Stores Inc.

This deal will help Target offer affordable same-day delivery more quickly, CEO John Mulligan said in a statement.

The second-largest discount store retailer in the US will start to offer same-day delivery at about half of its 1,800 stores early 2018.

“The news leaves us incrementally positive on Target’s ability to effectively compete with Amazon and Wal-Mart over the long term, and we think valuation should better reflect this,” wrote MKM Partners analyst Patrick McKeever in a note.

“The Shipt acquisition should dramatically accelerate Target’s digital fulfillment capabilities and yield a distinct competitive advantage as the company leverages its network of more than 1,800 stores across the country to expedite delivery of a variety of merchandise,” McKeever added.

It is worth mentioning that MKM rates Target shares buy with a $77 price target, up from $66.

Moreover, Neil Saunders, managing director of the research and consulting firm GlobalData Retail, wrote in a note to clients that "Target's plan to acquire Shipt signals a clear intent to capture a much larger slice of the online grocery market."