HSN’s parent acquires Cornerstone`s six e-retailing and catalog operations
IAC/InterActiveCorp, parent of HSN and HSN.com, is acquiring Cornerstone Brands Inc., which operates a number of e-commerce and catalog retailers, for $720 million, the company announced today. Cornerstone owns Ballard Designs, Frontgate, Garnet Hill, Smith + Noble, The Territory Ahead and TravelSmith.
IAC plans to use Cornerstone to leverage its way to a broader online presence, Thomas J. McInerney, executive vice president and CFO of IAC and CEO of IAC Electronic Retailing, said at the Bear Stearns Media Conference today. McInerney noted that TV retailing, HSN’s core, is a $7 billion a year market with prospects of 6-10% annual growth and dominated by QVC, while online retailing is a $70 billion a year market with growth of 25-30% a year. In interactive TV retailing, he said, “the competition is very well established. It’s almost impossible to break in in any scalable way.” By contrast, he said, online retailing “is a very large market, with growth of two or three times in the next handful of years.”
McInerney reports that 37% of Cornerstone’s $720 million a year in revenue, or $266.4 million, comes from the Internet. “We expect that to move up extremely quickly,” he said.
McInerney said he does not think the acquisition of Cornerstone will change IAC’s product mix significantly. In fact, observers believe IAC was more interested in Cornerstone’s expertise and infrastructure than in its products. “This gives IAC access to Cornerstone’s state-of-the-art back end,” says Claire Gruppo, president and co-founder of Gruppo, Levey & Co., Cornerstone’s investment banking firm.
Cornerstone, which is privately owned by principal shareholders Madison Dearborn Partners and JP Morgan Partners, was founded in 1995. It will become part of IAC`s Electronic Retailing unit and HSN. IAC also owns the Improvements and Alsto`s web sites and catalogs.
"This arrangement enables us to immediately and significantly increase our position as one of the world`s leading interactive retailers by expanding our presence across the multiple channels of catalog, TV, and online,” McInerney said. “Catalog shoppers have been the fastest retail shoppers to migrate online and aligning the promotional power of TV and the catalog, together with the convenience and dynamic experience of the Internet, will provide compelling shopping experiences for current and new customers.”
Back...
