QVC and Home Shopping Network are poised to soon hawk their wares under the same corporate roof. John Malone’s Liberty Interactive Corp., which owns QVC, has agreed to buy the 61.8% of HSN that it doesn’t already own for stock that values the company at $2.6 billion.
HSN shares are up 30% this morning following the announcement.
Investors have long expected the transaction. In early May Liberty CEO Greg Maffei said he saw “some synergy values” in a combination, but that HSN’s stock was overvalued. Since then, and prior to this morning’s offer, it declined 15.4%.
HSN lost 40.8% of its market value since mid July 2016 as it lost ground to QVC. In May then-CEO Mindy Grossman left to run Weight Watchers International. While searching for a replacement, the board created an Office of the Chief Executive with HSN President Bill Brand, CFO Rod Little, and COO Judy Schmeling.
Maffei says that QVC and HSN “produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms.” The value of that content “will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures.”
QVC chief Mike George will run HSN, which will remain based in St. Petersburg.
The combo should enable the company to “enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth,” he says. “As the prominent global video commerce retailer and North America’s third largest mobile and eCommerce retailer, the combined company will be well-positioned to help shape the next generation of retailing.”
In addition to running five U.S. shopping networks, Liberty hopes to develop mobile and OTT platforms.
The deal will swap 1.65 of a share of QVC’s Series A stock for each HSN share. That values HSN’s equity at $2.1 billion. It also had $529 million in debt as of the end of March.
HSN shareholders will end up with 10.6% of QVC Group’s equity and 6.9% of the votes.
The companies expect the deal to be complete by year end. It will need to be approved by antitrust officials and the FCC.