John Malone’s Liberty Interactive engineered a deal Wednesday to sell the floral and gifting business of its e-commerce unit Provide Commerce to FTD that will give Liberty a 35% stake in the combined company, but will put its plans to split into two tracking stocks on hold.
According to the deal, Liberty will receive 10.2 million shares of FTD common stock (about 35% of shares outstanding) and $121 million in cash. In return Liberty will contribute its floral and gifting e-commerce brands ProFlowers, Shari’s Berries and Personal Creations. The deal is expected to be completed by the end of 2014.
But the combination will delay Liberty Interactive plans to split into two separate tracking stocks – QVC Group to house its interests in home shopping channels QVC and HSN, Inc., and Liberty Digital Commerce for its e-commerce businesses like Provide Commerce and Bodybuilding.com. That deal was expected to be completed sometime this year but in a statement, Liberty Interactive said while it expects to continue with plans for the QVC tracker, the FTD transaction is putting plans for Liberty Digital Commerce on hold.
“In light of the pending Provide Commerce transaction, and other factors, Liberty is reevaluating the optimal structure and best alignment of the Liberty Digital Commerce Group assets,” the company said in a statement.” As a result, the timing of the transition to the QVC Group has been delayed.”
The combined FTD/Provide Commerce will have more than $600 million in annual revenue and the addition of the Provide Commerce brands will enable FTD to provide greater support to its member florists by expanding their resources and helping them create new programs and services.
FTD provides floral, gift and related products and services to consumers, retail florists, and other retail locations primarily in the U.S., Canada, the U.K., and the Republic of Ireland. The business uses the highly-recognized FTD and Interflora brands, both supported by the iconic Mercury Man logo that is displayed in nearly 40,000 floral shops in 150 countries. FTD’s portfolio of brands also includes Flying Flowers, Flowers Direct, and Drake Algar in the U.K.
“This transaction provides the opportunity to create significant value for our stockholders and offers immediate benefits for consumers and our premier network of member florists, said FTD CEO Robert Apatoff in a statement. “The combination of these businesses will expand the breadth of our brands, provide opportunities to further diversify our revenue streams and open up additional avenues for growth and innovation.”
Moelis & Company is serving as financial advisor to FTD and Jones Day is acting as legal counsel. Baker Botts L.L.P. and Cooley LLP are acting as legal counsel for Liberty and Provide Commerce, respectively
FTD shares soared 14% ($4.31 per share) to $33.85 in early trading Wednesday. Liberty Interactive shares were down 1% (30 cents) to $28.23 per share.
“We are excited to become the largest shareholder in the complementary businesses of Provide Commerce and FTD,” said Liberty CEO Greg Maffei in a statement. “FTD has an extensive florist network while Provide Commerce has a proven ability to source their flowers directly from top growers. The combined company will be able to offer comprehensive and unique gifting services in the U.S. and around the world.”