QVC (NASDAQ:QVCA) to Buy Zulily (NASDAQ:ZU) for $2.4 Billion

That price has fallen quite a bit since Zulily went public in 2013 – about $22 a share.

Liberty Interactive said it will pay the equivalent of $18.75 per Zulily share, now a 49% premium to Zulily’s stock price of $12.57 on Friday.

In the past, Zulily’s chief executive, Darrell Cavens has likened Zulily to the web’s version of QVC.

The deal has been approved by the boards of both companies, and is expected to be completed in the last quarter of the year. Mark Vadon, Zulily’s co-founder and chairman, will join Liberty Interactive’s board. Zulily will become part of the QVC Group, which includes QVC Inc. and its interest in HSN Inc.

Mr. Cavens said that Zulily will stick to its unusual business model – there will be little inventory, which means that shipping will still be slow. QVC will use Seattle-based Zulily’s technologies, which use historical and real-time data to customize products for millions of customers, Liberty said.

Zulily shares are up $5.90, or almost 50 percent, following news of the acquisition.

That would be only about a 2X return on A16Z’s November 2012 investment but it looks like the venture firm sold some of its shares back when Zulily was riding high in early 2014 with a valuation of about $9 billion.

In the second quarter ended June 28, about 56 per cent of Zulily’s orders were placed from a mobile device, up from about 49 per cent a year earlier.

QVC is best known for selling merchandise over television, and it also has an e-commerce site.

Both companies will be positioned to thrive through intelligent cross-marketing to a combined customer base of 19 million and millions more email prospects, leveraging QVC’s deep expertise in analytics and zulily’s powerful personalization tools. The company has live programming broadcasting to nine countries on three continents.

Zulily has a network of 10,000 vendor partners and offers thousands of products. Its marriage with QVC gives it resources and global scale.

Shares of Liberty Interactive Corporation (NASDAQ:QVCA) rose by 0.7% in the past week and 4.2% for the last 4 weeks.

ZU is trading at $18.53, up $5.96 or 47.41 percent on a volume of 9.02 million shares.