Liberty Interactive To Buy Online Retailer Zulily For $2.4 Bln

(RTTNews) - Cable tycoon John Malone's Liberty Interactive Corp. (QVCA, QVCB, LVNTA, LVNTB), the parent of home shopping network QVC Inc., has agreed to acquire online retailer Zulily, Inc. (ZU) for $2.4 billion in cash and stock, the two companies said Monday.

Under the terms of the deal, Liberty Interactive will acquire all the outstanding shares of Zulily for $18.75 per share. The offer price represents a 49 percent premium to Zulily's closing stock price of $12.57 on Friday, August 14, 2015.

Liberty Interactive will pay $9.375 in cash and 0.3098 newly issued shares of QVCA for each Zulily share. The company expects to fund the cash portion of the consideration from cash on hand at Zulily and QVC's revolving credit facility.

Zulily's founding shareholders, representing about 45 percent of the company's outstanding shares, have agreed to tender all of their shares into the exchange offer.

The transaction has been approved by the boards of directors of both the companies and is expected to be completed in the fourth quarter of 2015.

Liberty Interactive said the acquisition will be attributed to QVC Group tracking stock and Zulily will join the QVC Group.

Seattle, Washington-based Zulily, which specializes in limited-time sales or flash sales, has a network of 10,000 vendor partners. About 56 percent of the company's orders are placed over mobile devices.

West Chester, Pennsylvania-based QVC is best known for selling merchandise over television and also has an e-commerce site. The company has live programming broadcasting to nine countries on three continents.

Following closing of the deal, QVC Group will have about $5 billion in e-commerce revenue and 50 percent mobile penetration.

Together, the QVC and Zulily platforms represent combined annual revenues of more than $10 billion and 230 million units shipped globally to 19 million customers in 85 countries. The two companies have highly-complementary customer bases.

While each company will maintain its distinctive brand identity, this transaction will enable them to expand their product lineup, brand portfolio, and vendor network.

Through Zulily, QVC will have access to additional platforms to market its unique assortment, from Today's Special Value to exclusive proprietary brands. QVC's expertise and resources in attractive categories like Beauty, Home Decor and Apparel Special Sizes will enable Zulily to expand its category offerings.

In connection with the transaction, QVC President and CEO Mike George is being appointed to the Executive Committee of the Liberty Interactive board of directors. He will serve on that committee with John Malone, Chairman of the Board of Liberty Interactive, and Greg Maffei, President and CEO of Liberty Interactive.

Darrell Cavens, president and CEO of Zulily, will report directly to Mike George and the other members of the Executive Committee.

Cavens will continue to lead the Zulily business and the rest of Zulily's senior management team will remain in place and continue to report to him. Zulily Chairman and co-founder Mark Vadon will join the board of Liberty Interactive as well as provide strategic counsel and support to the companies.

Baker Botts L.L.P. is acting as legal advisor for Liberty Interactive. For Zulily, Goldman Sachs is serving as financial advisor, while Weil, Gotshal & Manges LLP and Cooley LLP are acting as its legal advisors.

ZU is trading at $18.53, up $5.96 or 47.41 percent on a volume of 9.02 million shares.

QVCA is trading at $29.56, down $0.70 or 2.31 percent on a volume of 823,525 shares.