Billionaire John Malone’s Liberty Interactive has agreed to acquire Zulily in a deal valued at $4.2 billion that will help Liberty’s QVC network expand its e-commerce business and appeal to younger shoppers.
Zulily, in which Chinese e-commerce giant Alibaba owns a stake of about 9% is known for its “flash” sales of clothing, primarily for women and children. Until Friday, its stock had tumbled nearly 67% from its initial public offering price in the fall of 2013.
The acquisition by Liberty, which was announced Monday, values Zulily at $18.75 a share in cash and stock, 15% below the IPO price. The stock jumped nearly 50% on Monday, closing at $18.74.
“For Zulily, the road from exuberant market debut to more muted sale has been paved by sales growth that did not keep pace with the retailer’s past,” The New York Times said. Second-quarter revenue inched up just 4%, the company disclosed early this month.
QVC, long known as the biggest name in TV-based sales, has been focused on bolstering its e-commerce capabilities. Acquiring Zulily would give QVC a chance to bring the flash-sales site’s vendors onto its own platforms, particularly on television, the Times said.
“QVC and Zulily are tremendous businesses with strong management teams,” Michael A. George, QVC’s chief executive, told analysts in a conference call. “And we want each to remain focused on building their brands and realizing their full potential while we collaborate on those high-value opportunities that will make our combined companies under Liberty much stronger than either could be on its own.”
George noted that only 6% of Zulily’s active customers have made a purchase on QVC.
Zulily has facing increasing competition from other flash sales sites such as Boston-based Rue La La and online giants such as Amazon.com.
“There is some work to do to get Zulily back on track in growth terms,” Neil Saunders, chief executive of research firm Conlumino, told Reuters. “QVC will need to oversee that work if it’s to get its investment to pay off.”