QVC buying HSN as shopping shifts online
Combined company will be No. 3 e-commerce retailer in U.S.
The parent company of QVC has announced that it plans to acquire rival Home Shopping Network Inc. in a stock transaction valued at $2.6 billion.
Liberty Interactive Corp. announced Thursday it would be buying the remaining 62 percent of HSN stock it does not already own. The combination would create the third-largest e-commerce company in the United States, behind Amazon and Walmart, according to company executives.
Bringing the two companies together will make them “stronger than they are individually and stronger yet as a standalone entity” in a “changing and difficult market,” said Greg Maffei, Liberty’s president and CEO.
The combination will help give QVC and HSN the scale they need to take on more established online competitors.
“By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth,” said Mike George, QVC president and CEO in a press release.
QVC was founded by Joe Segel, who at the time was running a software testing magazine. QVC hit the television airwaves in 1986 from a studio in the Goshen Industrial Park in East Goshen, Chester County. The company currently has 17,000 employees worldwide and 2016 revenues of $8.7 billion.
Both companies had long moved beyond cable channels and were trying to refashion themselves for younger shoppers buying more on their mobile phones.
“They’re a little bit late to the dance of the online arena, but are catching up now,” said Craig Johnson, president of Customer Growth Partners, a retail research consulting firm.
A key focus will have to be offering unique, exclusive products at a compelling value. Otherwise, Johnson said, competitors including Amazon and Walmart will be tough to beat online.
On Thursday, executives highlighted the potential for cost savings, complementary
but not wholly overlapping customers, their strength in video and the larger reach the two will have. The companies also said they hope to use Zulily, which QVC bought in 2015, to drive younger customers to both brands.
Combined, they’ll serve an estimated 23 million customers worldwide and ship more than 320 million packages every year, said George, adding that QVC is stronger in fashion and beauty, while crediting HSN in areas like electronics, fitness and health.
He also noted the companies’ social media presence and increasing e-commerce sales, with about $7.5 billion, and $4.7 billion in sales from mobile devices. In terms of video reach, the two will access more than 360 million TV homes globally.
The company said the deal will mean between $75 million
and $110 million in cost savings over the next three to five years.
The deal is expected to close during the last three months of 2017, pending required regulatory and shareholder approvals. The combined company will operate under the name QVC Group Inc., with QVC, HSN and Zulily as whollyowned subsidiaries.
Under the terms of the agreement, HSN shareholders will receive 1.65 shares of Series A QVC stock for every share of HSN stock they own. Liberty, based in Englewood, Colorado, said Thursday it will issue 53.4 million shares of QVC Series A common stock to HSN shareholders — the equivalent of paying $40.36 per share for HSN Inc. of St. Petersburg, Florida.
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