Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
A newly minted IPO will give Ritz Interactive more money to retire debt and make acquisitions, the company says in its S-1 filing with the Securities and Exchange Commission.
Ritz Interactive Inc. could initially raise up to $34.5 million in new working capital as a result of going public. Ritz, No. 84 in the Internet Retailer Top 400 Guide to Retail Web Sites, filed for its initial public offering on Sept. 9.
With the proceeds of the IPO, Ritz will pay off a $10 million promissory note and use the remaining capital for general corporate purposes and business development, including making more acquisitions. “We continuously evaluate opportunities to develop or acquire new businesses in attractive product categories within our core vertical markets and in new lifestyle product categories,” the company says in its S-1 filing with the Securities and Exchange Commission.
On its various web sites, which include RitzCamera.com, BoatersWorld.com and ritzPIX.com, the online inventory consists of approximately 4,800 SKUs of digital cameras and other photography products and approximately 30,200 SKUs of marine, boating and fishing products. During 2004, Ritz Interactive shipped more than 264,000 orders with an average order value of over $425 for digital cameras and other photography products and over $153 for marine, boating and fishing products.
In 2004, approximately 82.3% of merchandise sales were of photography products, compared to 17.1% of merchandise sales for marine, boating and fishing products.
In its IPO, Ritz notes that it depends heavily on its relationship with Ritz Camera Centers for both inventory management and fulfillment. Ritz Interactive uses three Ritz Camera distribution and warehouse facilities in Suwanee, GA, Topeka, KS, and Denton, MD, for fulfillment.
The company also purchases substantial inventory from Ritz Camera. For the six months ended June 30, Ritz purchased $30.8 million of products from Ritz Camera Centers. For 2002, 2003 and 2004, Ritz Interactive also purchased $45.4 million, $54.1 million and $65 million, respectively. “We maintain a strategic relationship with Ritz Camera Centers and have a perpetual agreement with them pursuant to which we purchase substantially all of our photographic and boating, marine and fishing products," the company says in its S-1 filing.
Ritz Interactive also runs a diverse hardware and software program. Hosting is provided by SAVVIS Communications Corp., an Internet data center provider. The company’s licensed technology consists primarily of Sun Microsystems servers running a Unix operating system, an IBM DB2 database and an IBM WebSphere Commerce software package along with IBM and Apache web server software, the company says in its S-1 filing.
Specific IPO terms have yet to be released. The $34.5 million valuation for the IPO was estimated solely for calculating the registration, the company says in its S-1 filing.