Liberty Interactive (NASDAQ:QVCA), which owns QVC, is planning to merge with its longtime rival, the Home Shopping Network (NASDAQ:HSNI), in a deal estimated at $2.1 billion. Liberty Interactive is technically buying the 62 percent of HSN that it does not already own in an all-stock transaction. The transaction is expected to close in the fourth quarter and is subject to shareholder and regulatory approval.
QVC and Home Shopping Network are the two best-known home-shopping TV networks in America. Both offer sales over multiple cable channels and digital platforms and have developed strong niches. Together, the two companies count 23 million customers, 2 billion website visits, and 320 million packages shipped annually.
Combining QVC and HSN is meant to help them combine resources and cut costs. Gregory B. Maffei, the chief executive of Liberty Interactive, said in a statement, “The increased scale of this combination will allow us to more effectively compete, we think, in a changing and evolving retail and digital environment.” The merger would create the largest television commerce company in the world, with $14 billion dollars in revenue.
Liberty Interactive plans to combine the operations of the two companies, then spin off its nonretail assets, including stakes in the cable operator Charter and Liberty Broadband. The remaining business would be rebranded as the QVC Group. QVC and HSN would remain stand-alone brands under a new QVC Group umbrella after the merger. The group will also include Zulily, the flash sale site that Liberty bought for $2.4 billion two years ago.
Under the terms of the transaction, investors would receive 1.65 shares of QVC Series A stock for each share of HSN they own. That would value HSN at $40.36 a share, a 29 percent premium to its closing price before the announcement of the merger. HSN other shareholders would end up owning 10.6 percent of the combined business.
Allen & Company and the law firm Baker Botts are advising Liberty Interactive on the deal. A special committee of HSN’s board of directors are being advised by Centerview Partners, Goldman Sachs, and the law firm Davis Polk & Wardwell.