In its second-largest acquisition, Amazon buys the company for $970 million.
Ever since Amazon.com rewrote IPO history, more Internet retailers have been going public. The latest: eToys Inc., a Santa Monica, Calif., Internet toy merchant. On Feb. 17 eToys joined the ranks of electronic commerce companies issuing public offerings. The company hasnât determined how many shares it will offer or at what price, although current owners of the company hold 13 million shares and the company is authorized to issue up to 200 million. The company anticipates raising $115 million for general working capital. Goldman Sachs; BancBoston Robertson Stephens; Donaldson, Lufkin & Jenrette; and Merrill Lynch are the underwriters. The company will trade on the Nasdaq exchange. The retailer, which opened its Web store in October 1997, sells more than 3,000 items from over 290 toy manufacturers. The companyâs fiscal year ends March 31. For the nine months ending Dec. 31, 1998, eToys had sales of $23.9 million. For the nine months ending December 31, 1997, the company had sales of more than $500,000. Analysts believe eToys is going public at an opportune time. Toys are becoming a hot Internet selling category. Shoppers are forecast to spend $68 million buying toys online this year, rising to an estimated $1.5 billion by 2002. ãIncreased capital enables eToys to invest in their brand and expand market share,ä says Evie Black Dykema, analyst, Forrester Research Inc., Boston. ãThey were first to the market and built sales. ä
Even with Sears and other big name retailers moving into online toy sales, Dykema says eToys is still nimble enough to stay ahead of its competitors. ãThey know which parents, grandparents, uncles and aunts are shopping the Web for toys,ä Dykema says. ãThey have the database to send out e-mail reminders about upcoming birthdays and holidays. Thatâs a pretty good marketing tool.ä