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Kozmo.com Nixes Merger Talks With Urbanfetch

It turns out that same-day delivery services Kozmo.com and Urbanfetch will likely remain bitter rivals until the end. And depending on which last-miler you believe, the end may not be far off for the latter of the two. Urbanfetch CEO Ross Stevens wasted little time stamping out the on-again, off-again rumors of a possible merger between his company and Kozmo with a curious statement to the press this week. And according to sources close to the deal the statement was a boldface lie.

According to Stevens, his company called off the deal over concerns that Kozmo's focus on a low average order size might get in the way of Urbanfetch's streamlined path to profitability. "We just didn't think Kozmo had a profitable model, and we didn't think that Urbanfetch Express would get the attention it needed," Stevens said, referring to his firm's profitable business-to-business Express division that focuses on package deliveries to corporate clients.

Stevens went on to say, "We reached an impasse for the combined companies. In today's capital markets, we do not believe that a multi-city national rollout with a focus on a low average order size will ultimately lead to profitability." Hogwash say anonymous sources inside the Kozmo camp. The truth of the matter is, that executives from the online start-up took one look at Urbanfetch's rotten balance sheet and ran for the hills. Apparently, Kozmo's top brass feared taking on its sickly rival's sizable liabilities and scant cash position.

Despite a non-disclosure agreement between the two companies, the 'mystery' sources were eager to rub a bit of salt in the wounds, saying that Urbanfetch had only enough cash on the books to remain in business for another month. And who can blame Kozmo officials for anonymously retaliating? If the (*wink*) sources are to be believed, Urbanfetch is guilty of a serious breach of good faith negotiations by publicly bad-mouthing Kozmo's entire business-to-consumer model shortly after talks fell apart.

While both companies have handed out numerous pink slips to employees in recent months, there has been ongoing speculation that Urbanfetch is in desperate need of a suitor or a sugar daddy just to remain afloat. An Urbanfetch customer rep recently disclosed that the company would be shuttering its hemorrhaging business-to-consumer delivery service, and layoffs would soon follow. On the flipside, according to a (*wink*) leaked internal memo written by Kozmo CEO Gerry Burdo to his employees last month, his dot-com upstart has been blowing the doors off its financial targets.

It's just another classic case of he-said, she-said. But here, the smart money believes Kozmo.com, which is backed by $60 million from Amazon.com , operates in almost a dozen cities across the U.S., and was the potential acquirer of Urbanfetch. Or, you can buy into Urbanfetch's unprofessional, overeager spin-doctoring. That the newcomer would so enthusiastically parade in front of the press to cast aspersions on a one-time marriage partner, in and of itself speaks volumes about the company's character.

Any questions or comments, love letters or hate mail? As always, feel free to forward them to kblack@internet.com.

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