QVC Group parent Liberty Interactive Corp. today entered into a deal to acquire the 62 percent of competitor HSNi it does not already own in the latest move aimed at gaining scale against the increasing dominance of Amazon.
Liberty currently owns 38.2 percent of HSNi and will buy the remainder in an all-stock transaction that gives the TV and online retailer an enterprise value of $2.6 billion, an equity value of $2.1 billion and places a value on HSNi’s shares of $40.36 each, representing a 29 percent premium over the closing price on July 5. Liberty will issue a total of 53.4 million class A shares under the deal.
Shares of HSN quickly rose 28.4 percent to $40.20, nearly matching the buyout valuation, and QVC’s stock inched up 0.1 percent to $24.49 in morning trading. The deal, which is expected to close in the fourth quarter, will leave non-Liberty shareholders with about 10.6 percent of the combined company.
The combined company is expected to qualify for the S&P 500 stock index, which will open the door to a vast pool of large investors that focus only on the market’s biggest companies.
“The addition of HSN will enhance QVC’s position as the leading global video e-commerce retailer. Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms,” said Greg Maffei, Liberty Interactive president and chief executive officer. “The value of the combined QVC, HSNi and zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures.”
Maffei told analysts on a conference call that, “The increased scale of this combination will allow us do more effectively compete we think in the changing and evolving retail and digital environment.”
QVC has owned at least 30 percent of HSN since 2009, but he said the time for the deal had come, given stock prices at both companies and that “management changes at HSNi also provided near-term catalyst or opportunity for change.”
Mindy Grossman stepped down as ceo of HSN in April to take the lead at Weight Watchers.
Liberty said the purchase of HSNi will increase the scale of QVC, enable ongoing development of ecommerce, mobile and other platforms, “optimize programming across five U.S. networks,” and enable both companies to cross market.
Mike George, QVC president and ceo, will lead the combined operations.
“HSNi founded the industry 40 years ago and helped it grow with exciting initiatives like Shop By Remote and media integrations with leading content producers,” George said. “By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth.”
George added, “As the prominent global video commerce retailer and North America’s third-largest mobile and ecommerce retailer, the combined company will be well positioned to help shape the next generation of retailing.”