Toy e-tailer eToys Inc. announced Monday that it
signed an agreement to merge with BabyCenter, Inc.
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.
On February 17, Santa Monica, CA-based eToys filed an IPO slated for the week of April 26. The proposed offer price was $10-$12 per share, with 8.2 million shares offered. Underwriters are Goldman, Sachs & Co.; BancBoston Robertson Stephens; Donaldson, Lufkin & Jenrette Securities Corp.; Merrill Lynch & Co.
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.