The U.S. online shopping world's biggest day is here, but will strong web sales on Black Friday and Thanksgiving cut into Cyber Monday's take?
Webvan Group Inc. has acquired HomeGrocer.com Inc., its rival online grocery service, in a transaction valued at approximately $1.2 billion. The deal, called a merger, unites two of the leading online retailers that have personalized delivery capabilities.
The combined company, which will operate under the name Webvan Group Inc., is expected to extend Webvan's market reach to a total of 13 U.S. metropolitan areas by the end of 2000. Webvan, Foster City, Calif., and HomeGrocer, Kirkland, Wash., currently operate in nine major metropolitan areas. By the end of the year, as a result of the merger, Webvan expects to serve metropolitan area markets in Atlanta; Baltimore; Bergen County, N.J.; Chicago; Dallas; Los Angeles; Orange County, Calif.; Portland, Ore.; Sacramento, Calif.; San Diego; San Francisco; Seattle; and Washington, D.C.
Under the terms of the agreement, HomeGrocer.com stockholders will receive about 1.1 shares of Webvan common stock in exchange for each HomeGrocer.com share held. Approximately 138 million shares of Webvan stock will be exchanged for all currently outstanding shares of HomeGrocer.com.
The companies expect the transaction to close in the third or fourth quarter of 2000, upon satisfaction of customary closing conditions and upon receipt of governmental and shareholder approvals. The merger will be accounted for as a purchase transaction. The proposed merger was unanimously approved by the boards of directors of both companies. Upon completion of the acquisition, Webvan's founder Louis Borders will remain as chairman of the board of Webvan Group Inc., and Shaheen will continue as president and CEO of the combined company. In addition, two new members will join Webvan's board.