The acquisition announced by price comparison site GoCompare (GOCO) this morning may be modest in size but could materially broaden its offering to consumers.

The company gains 3.1% to 132.8p as it snaps up energy price comparison and switching service Energylinx for £10m in cash - funded out of internal resources - thereby adding to its existing footprint in insurance and financial services.

Shares in GoCompare have performed pretty well since it was spun out of insurance business Esure (ESUR) in November 2016 at an initial 76p. In November 2017, the company batted off a takeover attempt by Zoopla’s parent company ZPG (ZPG) at a pretty low-ball price of 110p per share.

ZPG itself has now succumbed to a £2.2bn from US private equity firm Silver Lake and there is speculation it may now bid for GoCompare and bolt it on to ZPG, although it is notable that the latter already has an energy price comparison arm in uSwitch.

Putting this M&A speculation to one side, the insurance vertical in which GoCompare has been historically concentrated in is highly competitive so a diversification effort makes logical sense.

Describing the deal as ‘small but strategically important’ stockbroker Peel Hunt adds: ‘The importance of the deal is to bring into GoCompare stable the commercial skills underpinning the energy switching market.

‘The deal will have limited impact on this year's forecasts, but is a material strategic step for GoCompare.’

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Issue Date: 14 Jun 2018