Liberty Interactive Announces Split Of QVC From Other E-Commerce Holdings
By Christine Kern, contributing writer
Reuters reported that Liberty Interactive has announced that they will spin off the QVC portion of their e-commerce holdings into a separate venture.
According to a Liberty Interactive press release, the Board had approved creating two tracking stocks, splitting off their QVC cable shopping business from its digital commerce. QVC will operate as the QVC Group, and the rest of the e-commerce companies will operate as the Liberty Ventures Group.
As part of the deal, the statement explains, Ventures Group will be allocated $1 billion in cash and Liberty Interactive shareholders will garner 67.7. million shares of Liberty Ventures stock, approximately 0.14 of the new Liberty Ventures share for every Liberty Interactive share they hold.
The entities included in Liberty's digital commerce companies are Backcountry.com (outdoor gear and apparel retailer), Bodybuilding.com (supplement and fitness retailer), CommerceHub (drop ship and fulfillment vendor), Evite (online invitation company), Provide Commerce (owner of ProFlowers and other gift retailers) and The Right Start (toddler apparel).
The planned split was first revealed by the company last October.
"We are excited to introduce the QVC Group which focuses on our leadership position in video commerce, enables a cleaner comparable analysis and provides for more targeted share repurchase and equity incentives," said Greg Maffei, Liberty Interactive President and CEO, in the company statement. "The Liberty Ventures Group is projected to have over $2.7 billion in cash by year end which we can invest in a wide set of opportunities in TMT, including digital commerce."
There has also been some talk that QVC might try to acquire HSN. Fitch ratings stated in their report that “Fitch recognizes that there is risk of an acquisition of HSN, Inc. However, the ratings may remain unchanged depending on how the transaction is structured and on the company's commitment to returning QVC's leverage to 2.5x. Fitch recognizes QVC's ability to manage product mix and adapt to its customers' shopping preferences.”
According to the company, it plans to reevaluate its stock options after the release of their third quarter earnings. Their stock repurchase activity was suspended in September, pending the split.