E-commerce outsourcer Global Sports Inc. is acquiring luxury goods purveyor Ashford.com Inc. in a cash and stock deal valued at about $14 million.
King of Prussia, Pa.-based Global Sports said it intends to extend its outsourced e-commerce solution to retailers in the luxury goods category and expand Ashford.com’s e-commerce outsource solution in the corporate gifts category.
Stockholders of Houston-based Ashford.com will receive .0076 of a share of Global Sports common stock and 12.5 cents cash for each share of Ashford.com common stock. Global Sports said it expects to issue approximately 430,000 shares of common stock and pay approximately $7.1 million of cash in exchange for all of the outstanding shares of Ashford.com.
When trading halted earlier this week because of the tragedy at the World Trade Center and the Pentagon, Global Sports shares were at $16.51 and Ashford was at 17 cents, below the level for continued listing on Nasdaq. Ashford has never had a profitable quarter and lost 27 cents a share for the quarter ending last June.
“This acquisition represents a significant step forward in our strategy to expand selectively beyond our initial category of sporting goods,” said Michael G. Rubin, chairman and CEO of Global Sports.
As of June 30, Ashford.com had a tangible net worth of $27.9 million including about $8.6 million in cash, cash equivalents and accounts receivable and approximately $18.4 million in inventory.
Global said that as a result of the deal, it expects net revenues for fiscal 2002 to exceed $200 million compared to the current average of analysts’ expectations of $185 million.
Pro forma operating profit is now expected to exceed $11 million compared to the current average of analysts’ expectations of $10 million. On a fully diluted basis, Global has never turned a profit and lost 24 cents a share for the quarter ending last June. Its revenues have been climbing, however.
Global Sports develops and operates e-commerce businesses for retailers, media companies, and professional sports organizations, including Bally Total Fitness, Blades Board & Skate, BlueLight.com, Carolina Panthers, Denver Broncos, Detroit Lions, Dick’s Sporting Goods, Dunham’s Sports, Fogdog Sports, Fox Sports, Gart Sports, G.I. Joe’s, MC Sports, Modell’s Sporting Goods, Olympia Sports, iQVC, Sport Chalet, The Athlete’s Foot, The Sports Authority and WebMD.
