Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
The floral and gifting businesses include ProFlowers, Shari's Berries and Personal Creations. The combined company could challenge online flower giant 1-800-Flowers.
Flower retailer FTD Companies Inc. announced today it will buy the floral and gifting businesses, including the e-commerce sites, of Provide Commerce from Liberty Interactive Corp. for $430 million in stock and cash. FTD and Liberty expect to complete the transaction by the end of 2014.
Provide Commerce’s floral and gifting portfolio includes flower retailer ProFlowers, online dipped berry company Shari's Berries and personalization retailer Personal Creations. The combined company will have more than $1 billion in total revenue. The move also puts FTD, which booked an Internet Retailer-estimated $300 million in 2013 web sales, in closer competition to rival 1-800-Flowers, which did an estimated $538.5 million in 2013 web sales.
Provide Commerce's Red Envelope business is not part of the sale. RedEnvelope.com was acquired by Provide Commerce for about $6 million. The online gifts retailer filed for bankruptcy in 2008 and RedEnvelope.com was subsequently resurrected by Liberty.
FTD expects to save $25 million in costs in the first three years following the completed purchase. The savings are expected to come from combining operations between the two businesses.
“The combination of these businesses will expand the breadth of our brands, provide opportunities to further diversify our revenue streams and open up additional avenues for growth and innovation," says Robert S. Apatoff, president and CEO of FTD. "We expect the combination with Provide Commerce's highly recognizable and successful portfolio of brands to enhance our already robust consumer product offerings. In addition, we expect the transaction will provide us with greater resources to further develop new product and service categories and broaden our consumer demographic through complementary customer bases.”
Gregory B. Maffei, president and CEO of Liberty, stresses the complementary strengths of each business. “FTD has an extensive florist network while Provide Commerce has a proven ability to source their flowers directly from top growers,” he says. “The combined company will be able to offer comprehensive and unique gifting services in the U.S. and around the world."
Matt Nemer, senior analyst at Wells Fargo, says the acquisition is a sign of the maturing e-commerce market. “This is a healthy sign of continued consolidation in the e-commerce industry among two very similar, albeit lower growth, businesses,” he says.
FTD is No. 105 in the Internet Retailer Top 500 Guide. About half of FTD’s 2013 total sales came online, about $300 million of total reported sales by the company of $627.3 million.
Liberty is No. 6. Liberty Interactive did an estimated $4.8 billion in web sales across all its e-commerce properties, which include QVC.com. In 2013, QVC.com sold $2.5 billion worth of goods on its web site.