QVC Parent Liberty Interactive To Acquire HSNi

QVC parent, Liberty Interactive Corp., has entered into an agreement to purchase HSN, Inc. for $2.1 billion.

In announcing the acquisition, Liberty Interactive stated that the benefits of the deal include:

  • Increase scale, which will boost the competitive position of QVC Group.
  • Significant synergies arising from cost reduction and revenue growth opportunities.
  • Enhanced e-commerce, mobile and OTT platform capacities.
  • Programming optimization across five shopping-oriented networks operating across the United States.
  • Fresh cross-marketing opportunities that could energize engagement with existing and potential customers.
  • Financial flexibility due to HSNi’s lower debt leverage.

In its pre-acquisition configuration, HSNi consisted of the HSN broadcast and online retail operation and Cornerstone, comprised of home and apparel lifestyle banners Ballard Designs, Frontgate, Garnet Hill, Grandin Road and Improvements. After the closing of the deal, HSNi headquarters will remain in St. Petersburg, FL and will be overseen by Mike George, QVC president and CEO.

Before the acquisition agreement was settled, Liberty Interactive already owned 38.2% of HSNi and, in the deal, it will acquire the remaining 61.8% stake. As such, HSNi will become a Liberty Interactive wholly-owned subsidiary. HSNi shareholders will receive 1.65 shares of Liberty’s Series A QVC Group common stock for every share of HSNi common stock they own. Based on the Series A QVC Group common stock’s closing price as of July 5 and the number of HSNi undiluted shares outstanding as of May 1, the enterprise value of HSNi would be $2.6 billion and the equity value would be $2.1 billion.

For the last completed fiscal year, HSN posted net sales of $3.57 billion versus $3.69 billion in the prior-year period. Operating income was $205.8 million compared with $284 million in the fiscal year before. Net income came in at $118.7 million, or $2.25 per diluted share, versus $169.2 million, or $3.16 per diluted share, in the previous-year period. Adjusted net income was $138.3 million, or $2.62 per share, versus $175.6 million, or $3.28 per share, in the quarter a year before.

For the 2016 fiscal year, Liberty International’s QVC operation reported net revenue of $8.68 billion versus $8.74 billion in the fiscal year earlier. Operating income was $1.2 billion as compared to $1.28 billion in the 2015 fiscal year.