QVC flashes cash to capture youthful Zulily

Liberty Interactive, owner of home-shopping channel QVC, announced Monday it will acquire online retailer Zulily for $2.4 billion. Based on QVCA’s closing price on August 14, 2015, zulily shareholders would have received compensation valued at approximately $18.75 per share.

Zulily was acquired by Liberty Interactive Corporation.

The acquisition gives QVC access to Zulily’s demographic of younger customers, expertise in personalization, and the latter’s capabilities in eCommerce, according to the press release. The company’s unprecedented annual growth went from $331 million in 2012 to $1.2 billion in 2014. Chinese e-commerce giant Alibaba Group Holding Ltd (BABA.N) owns a stake of about 9 percent in the company.

The deal is expected to combine two complementary companies in QVC and Zulily, and strengthen the former’s leadership position in experiential, discovery driven shopping.

Added Darrell Cavens, Zulily’s president and CEO: “This combination under Liberty is about investing in our future and providing a tremendous opportunity to accelerate our platform for growth of the Zulily brand through the partnership with QVC”.

The deal should close sometime during the fourth quarter of this year and zulily will remain with its current management team, without having to move from its Seattle headquarters. Of the 4 analyst estimates, the most bullish sees the stock reaching $56.34 within the next 12 months while the most bearish analyst sees the stock at $40.82 within the year.

QVC and zulily will operate as separate consumer-facing brands but will aim to get the best from their combined assets, such as using QVC’s global scale, curation, vendor relationships and video commerce expertise at zulily. In connection with the transaction, Mike George is being appointed to the executive committee of the Liberty Interactive board of directors and will serve on that committee with John Malone and Greg Maffei.

Cavens will report directly to George and the committee.