eToys and BabyCenter Merge
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Under the terms of the agreement, at the closing of the transaction, eToys will issue shares of its common stock to BabyCenter, Inc.'s stockholders in exchange for outstanding shares of BabyCenter, Inc. capital stock.
If the transaction were completed today, BabyCenter, Inc.'s current stockholders would own approximately 15 percent of the combined company. eToys intends to account for the merger using the purchase method of accounting and intends it to be a tax-free reorganization.
The merger is expected to be finalized by the end of the second quarter this year.
The e-commerce company was founded in 1996 by ex-Disney exec Edward Lenk and idealab! founder Bill Gross. The virtual toyland features over 9,500 items and 750 brands. Products are from small and major toymakers such as Mattel and Hasbro. idealab!'s Gross will own 25 percent of eToys following the IPO.
Privately-held San Francisco-based BabyCenter, Inc. operates BabyCenter.com, aimed at expectant and new parents, featuring informational and medical content, bulletin board communities and shopping through its BabyCenter Store. Last fall the company launched its Consumer Health Interactive division, which develops Internet marketing products for healthcare companies.