PE groups to acquire CommerceHub for $1.1 bln
Published: Mar 6, 2018
CommerceHub Inc., a technology company that helps retailers manage e-commerce inventory, is being acquired by private-equity firms GTCR LLC and Sycamore Partners for $1.1 billion.
The company's platform connects customers like Walmart Inc. and Best Buy Co. to suppliers that can ship online orders directly to consumers. Known as drop-shipping, the strategy helps retailers compete with rivals such as Amazon.com by offering an array of goods on their websites without having to keep the items in stock at warehouses and stores.
Based in Albany, N.Y., CommerceHub was spun off from Liberty Interactive Corp. in 2016 as a publicly traded company. The company had $111.1 million in annual revenue for 2017 and $9.9 million in net earnings.
GTCR and Sycamore said Tuesday they would acquire all shares outstanding of CommerceHub for $22.75 per share in cash, a 24.5% premium over the $18.27-per-share price at the close of trading on Monday.
The deal comes after CommerceHub last week reported a roughly 47% drop in net profit for the fourth quarter, to $3.2 million in 2017 from $6 million the previous year. Revenue for the quarter was $36.7 million, up 12% year-over-year.
CommerceHub recently signed a deal with Macy's Inc. and gained several new customers in 2017, its first full year as an independent company. Those gains were offset by bankruptcies across the retail sector and the loss of a retail customer.
"While our new customers ramp up, we will see a larger headwind in the first half of the year from these terminations and the bankruptcies," Mike Trimarchi, the company's chief financial officer, said in an earnings call last week.