Onsale, Egghead.com Merging

Online auctioneer Onsale Inc. and online software retailer Egghead.com Inc. Wednesday agreed to merge in a stock deal worth about $400 million.

A total of .565 shares of Onsale will be exchanged for each Egghead.com share. Egghead shareholders will own about 47 percent of the combined company. Both companies’ boards of directors have already approved the deal.

The new company will be known as Egghead.com. However, in addition to computer product from Egghead, the company will also feature auctions and sales of surplus goods under the Onsale name. It will be headquartered in Menlo Park, Calif. George Orban, Egghead.com’s chief executive officer, will become chairman of the combined company and Jerry Kaplan, Onsale’s chief executive officer, will serve as CEO.

Kaplan said the merger is a recognition of the fact that scale and strong brand awareness are the keys to success in Internet retailing.

“Our plan is simple: Combine two top technology retailers to create a clear market leader; pool our marketing budgets to drive a single brand around the Egghead.com name; leaverage the resulting traffic with Onsale’s high visitor-to-customer conversion rates and increase efficiency by eliminating duplicative operating costs,” he said.

Orban said the companies plan to capitalize on the strong awareness of the Egghead.com brand.

For Egghead, the merger represents a continuing evolution in what was once only a “brick-and-mortar” software store. In February, Egghead closed the last of its stores and moved all its operations online. In addition to offering software, the company operates two online auction sites, Surplus Direct and Surplus Auction.

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