Bloomberg: “Today’s special: HSN for just $2.1 billion, in one easy payment! That’s almost 20 percent off last year’s retail price! (Fine print: It’s not in great condition.)”
After battling it out for two decades, QVC has acquired HSN, creating a super shopping conglomerate with similar business models but distinct cultures and category strength and eye towards dominating online. The new competition—Amazon and Walmart.
WHO: HSN launched the idea of home shopping in 1977 when it began airing programming that showcased inventors, entrepreneurs, and designers plugging their wares. Begun in 1994, HSN was among the first e-commerce retailers. HSNi consists of HSN, a leading interactive multichannel retailer, and Cornerstone, which is comprised of leading home and apparel lifestyle brands including Ballard Designs, Frontgate, Garnet Hill, and Grandin Road and Improvements.
Liberty Interactive Corporation operates and owns interests in a broad range of digital commerce businesses and is controlled by billionaire media mogul John Malone. Those businesses are currently attributed to two tracking stock groups: the QVC Group and the Liberty Ventures Group. The businesses and assets attributed to the QVC Group of Liberty Interactive Corporation’s subsidiaries, QVC, Inc. and Zulily, and its interest in HSNi. QVC was founded in 1986, and has focused on fashion and beauty.
WHY: The merger will provide benefits to all players, according to a press release, including scale, meaningful synergies through cost reduction and revenue growth opportunities, development of e-commerce, mobile, and OTT platforms, cross-marketing opportunities and financial optionality due to HSNi’s lower debt leverage.
IN THEIR OWN WORDS:
“We are excited to announce the acquisition of HSNi. The addition of HSN will enhance QVC’s position as the leading global video eCommerce 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 CEO.
Mike George, QVC President and CEO, said, “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.”
“Joining the QVC Group will give us instant access to global consumer markets, a leadership team with deep expertise and a global perspective, and the opportunity to further strengthen our content-based brand portfolios in a changing retail landscape,” Arthur C. Martinez, HSNi’s chairman, told WWD. “We have both been innovators in a growing and dynamic retail environment with a unique vision of what shopping should be, and as new technologies continue to change our everyday lives, together we can develop the next generation of shopping for the next generation of consumers.”
THE RESULT OF THE MERGER:
- HSN, QVC, and Zulily will reach $14 billion in revenue.
- $7.5 billion in online sales and $4.7 billion in mobile commerce revenue.
- Will be no. 1 in global video commerce.
- 2 billion visits to its various websites.
- Will broadcast more than 145 hours of live content per day.
- Every year combined they produce over 55,000 hours of shoppable video content.
- A reach of over 360 million households.
- 186MM customer contacts.
- Global reach of 23 million viewers.
- 22,000 brand portfolio.
- 320 million packages shipped annually.
- Will operate 17 cable channels around the world.
- 27,000 team members in eight countries.
- 8.3MM Facebook followers.
- 240+ social media pages.
- Creation of the largest television home shopping company in the world and the third-largest e-commerce site, trailing only behind Amazon and Walmart.
- Liberty Interactive currently owns 38.2% of HSNi and, under the definitive agreement, will acquire the remaining 61.8% stake, making it a wholly owned subsidiary, attributed to the QVC Group tracking stock.
- The all-stock deal is valued at $2.1 billion.
- HSNi shareholders will receive fixed consideration of 1.65 shares of Series A QVC Group common stock for every share of HSNi common stock.
- According to CNN Money QVC did $8.7 billion in sales last year, while HSN had revenue of $3.5 billion in 2016.
- In 2016, QVC and its global networks raked in $8.6 billion worth of sales.
- HSN’s financial performance has suffered in recent years, and its market value has tumbled to half its peak price. Stock in HSN jumped nearly 35% on the news, reaching $42 a share, or up $10.70 apiece, and closed at $39.70, up about 27 percent. QVC’s stock slipped 1.2 percent to $24.16.
- QVC and HSN will operate as separate brands.
- HSNi headquarters will remain in St. Petersburg.
- QVC’s George will oversee HSN operations but it’s likely HSN will still have its own management team.
- According to WSJ, QVC expects to get cost savings of $75 million to $110 million annually from the deal in three to five years.
- HSNi’s board of directors will be dissolved with one of their directors being appointed to the Liberty Interactive board at closing.
- According to the Tampa Bay Times, there was the hint of a possible sale in the near future of HSNi’s Cornerstone Brands, a portfolio of e-commerce and catalog businesses like Ballard Designs and Garnet Hill.
- Allen & Company is serving as financial advisor and Baker Botts LLP is serving as legal advisor to Liberty Interactive.
- Centerview Partners and Goldman Sachs Group, Inc. are serving as financial advisors and Davis Polk & Wardwell LLP is serving as legal advisor to the Special Committee of the Board of Directors of HSNi.
Photograph via QVC UK blog.