QVC to merge with Home Shopping Network in US$2.1 billion deal

QVC said Thursday that it would merge with its longtime rival, the Home Shopping Network, in an all-stock deal worth US$2.1 billion.

John C Malone's Liberty Interactive Corp, which owns QVC, is buying the 62 per cent of HSN Inc that it does not already own. The transaction would combine two businesses that have focused on marketing electronics, jewelry, fashion and other products via sales on their broadcast channels, but that also sell their wares online and through retail stores.

The merger also came as sales have weakened at many traditional brick-and-mortar retailers, as more consumers turn to the web for purchases. HSN's sales declined 3 per cent last year.

The deal would give the combined company greater scale and enhance its competitive position, while allowing the company to reduce costs, QVC said.

"We are excited to announce the acquisition of HSNi," Greg Maffei, the president and chief executive of Liberty Interactive, said in a news release. "The addition of HSN will enhance QVC's position as the leading global video e-commerce retailer."

HSN, based in St. Petersburg, Florida, broadcasts to 95 million households in the United States via cable, as well as online streaming. It also sells home and apparel brands through its Cornerstone business, which markets products through catalogs, branded e-commerce websites, and 14 retail and outlet stores. The Cornerstone brands include Frontgate and Ballard Designs.

The company reported sales of US$3.6 billion in 2016, and it employs about 6,900 people.

Under the terms of the transaction, investors would receive 1.65 shares of QVC Series A stock for each share of HSN they own. That would value HSN at US$40.36 a share, a 29 per cent premium to its closing price on Wednesday.

Shares of HSN soared nearly 30 per cent in early trading Thursday.

HSN shareholders, other than Liberty Interactive, would own 10.6 percent of the combined business.

The transaction is expected to close in the fourth quarter and is subject to shareholder and regulatory approval.

After the merger, Liberty Interactive, based in Englewood, Colorado, plans to spin off its cable and other nonretail assets into a separate company and rename itself QVC Group.

In addition to HSN and QVC, the combined QVC Group business would include the flash sale website Zulily, which Liberty Interactive bought in 2015 for US$2.4 billion.

NYTIMES