Liberty Interactive (NASDAQ:QVCA) and Home Shopping Network (NASDAQ:HSNI) will merge in a $2.1 billion+ stock deal initiated by Liberty. The deal, announced yesterday, caused HSN stock to skyrocket 26.8%.
The deal, with values of up to $2.6 billion, will allow QVC, owned by Liberty Interactive, to purchase the 62% share in HSN that the company does not own. The acquisition comes after months of turmoil at HSN that saw the company’s CEO, Mindy Grossman, leave for a lead role in Weight Watchers.
Grossman was a leading figure in the company and helped HSN transform the company into an e-commerce and lifestyle network. The company now generates more than half of its revenue from e-commerce, with over 50,000 products sold online. HSN is still a mainstay in homes, with broadcasts reaching 90 million households.
The merger will allow QVC and HSN to better compete with the likes of Amazon (AMZN) in the online space.
The merged company plans to offer unique items to consumers that aren’t available on large e-commerce stores. HSN’s CFO, Rod Little, states, “It has been a tough period.” Little continued, “We are not happy with the performance. It’s part of why we are here today, I guess.”
QVC, which has owned a 38% stake in HSN since 2009, plans to use the merger to expand their e-commerce capability, reduce costs and capitalize on synergies.
The combined companies will offer their services to 23 million customers and ship in excess of 320 million packages every year. The combined company will generate $7.5 billion in online sales with $4.7 billion in mobile sales.
The deal will include 53.4 million QVC Series A common stock transferred to HSN shareholders. Liberty Interactive shares jumped as much as 5% on Thursday following the announcement of the acquisition and are up 1.16% on Friday in early-morning trade.