Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
With a cash infusion of $19 million from its IPO, BabyUniverse wants to buy online retailers in the baby, toddler and maternity products space with established market share.
With proceeds that could total $19 million from an initial public stock offering of 2 million shares, BabyUniverse Inc. intends to grow organically. But the company, which went public on the American Stock Exchange on Aug. 3, isn’t ruling out making acquisitions.
In fact, according to BabyUniverse, No. 224 in the Internet Retailer Top 400 Guide to Retail Web Sites, the market for online retailers in the baby, toddler and maternity products space is diverse and presents a good opportunity for making acquisitions, particularly of established Internet merchants with existing brand awareness.
“The market for online retailers offering baby, toddler and maternity-related products is highly fragmented with a significant number of small competitors representing a significant percentage of total segment sales,” the company says in its S-1 documents filed with the Securities & Exchange Commission. “We believe that our seasoned senior management team and our scalable business architecture make us well-suited to acquire both large and small industry competitors. We intend to actively pursue an external growth strategy that contemplates our company consummating the strategic acquisition of companies in our industry.”
With the proceeds, BabyUniverse also says it will explore more multi-channel opportunities and more customer segments such as in the U.S. Hispanic and Latin American markets.
For the first quarter of 2005, BabyUniverse, which has been selling online since 1997 and carries a web inventory of about 100,000 SKUs, posted gross sales of $4.8 million, which is up 41% from $3.2 million for the three months ended March 31, 2004. The net loss for the first three months of 2005 was $97,100 compared to a net loss of $119,400 for the first three months of 2004, the company says in its S-1 filing.
For 2004, BabyUniverse increased its gross sales 60.2% to $14.8 million from $9.2 million in 2003. Net income for 2004 was $221,061, an improvement from a net loss of $200,796 in 2003, the company says.
Among the directors sitting on the BabyUniverse board is Dan Marino, former quarterback for the Miami Dolphins. Though still in a quiet period, BabyUniverse is expected to report its second quarter 2005 numbers on Aug. 29.