InterActive Snaps Up Catalog/Online Retailers

Barry Diller’s IAC/InterActive Corp is acquiring catalog and online retailer
Cornerstone Brands in a deal valued at $720 million, the e-commerce company
announced today. Cornerstone Brands includes the Web sites and catalogs of retailers Frontgate, Ballard Designs, Garnet Hill, Smith and Noble, The Territory Ahead and TravelSmith.

Cornerstone will join IAC’s electronic retailing unit and become part of the company’s Home Shopping Network (HSN). The new structure will provide HSN Catalog services with access to Cornerstone’s centralized platform and allow
the companies to share in cross-promotional benefits.

“This arrangement enables us to immediately and significantly increase our
position by expanding our presence across the multiple channels of catalog, TV and online,” Thomas J. McInerney, executive vice president at IAC , said in a statement. “Internet retailing is a substantial and
expanding part of the overall retail landscape, and with this acquisition we
are well positioned to capitalize on this trend.”

In addition to HSN, IAC counts Expedia,, TicketMaster,
LendingTree and Hotwire among its interactive properties.

“We will seek to develop meaningful ties between the HSN and Cornerstone
brands and consumer bases, share our significant Internet experience to
further Cornerstone’s online presence and leverage operating efficiencies,”
said Marty Nealon, president of HSN U.S.

Cornerstone claims two million active members who shop its direct marketing
and multi-channel outlets. According to Cornerstone, the company averaged
almost 20 percent in top-line growth over the last two years.

“Individually and collectively our brands are positioned for continued
growth, and our access to the TV retailing and interactive expertise of HSN
and IAC will elevate our natural course, especially online,” said John Schaefer,
currently president and CEO of Cornerstone.

Cornerstone reported revenues, EBITDA, and operating income before
amortization of $720 million, $66 million and $59 million, respectively, for
the fiscal year ended Jan. 29, 2005. The deal is expected to close in the
second quarter of this year.

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