UPDATE: FTD Cos. to Combine Businesses, Acquired Liberty's Provide Commerce Floral, Gifting Businesses for ~$430M
FTD Companies, Inc. ("FTD") (Nasdaq: FTD) and Liberty Interactive Corporation ("Liberty") (Nasdaq: LINTA) (Nasdaq: LINTB) (Nasdaq: LVNTA) (Nasdaq: LVNTB) today announced that they have executed a definitive agreement under which FTD will acquire Liberty's Provide Commerce floral and gifting businesses. Under the terms of the $430 million transaction, Liberty will receive 10.2 million shares of FTD common stock representing 35% of the combined company and $121 million in cash. FTD and Liberty expect to complete the transaction by the end of 2014.
The strategic combination of FTD's brand and floral network with the Provide Commerce collection of established and highly recognizable consumer gifting e-commerce brands, which include ProFlowers, Shari's Berries and Personal Creations, will further FTD's vision to become the world's leading and most trusted floral and gifting company. The transaction will unite two highly complementary businesses, generate material cost synergies and create a team with "best-in-class" operating strategies. Together, FTD and Provide Commerce, each with over $600 million in annual revenues, will offer consumers innovative and expansive floral and gift products and an enhanced shopping experience. The combined company will also allow FTD to provide greater support for the overall floral industry by expanding resources to create new programs and services to support member florists in their local businesses.
"This transaction provides the opportunity to create significant value for our stockholders and offers immediate benefits for consumers and our premier network of member florists. The combination of these businesses will expand the breadth of our brands, provide opportunities to further diversify our revenue streams and open up additional avenues for growth and innovation," said Robert S. Apatoff, President and Chief Executive Officer of FTD. "We expect the combination with Provide Commerce's highly recognizable and successful portfolio of brands to enhance our already robust consumer product offerings. In addition, we expect the transaction will provide us with greater resources to further develop new product and service categories and broaden our consumer demographic through complementary customer bases. We are excited about the opportunities this combination will create for consumers, member florists and our stockholders."
"We are excited to become the largest shareholder in the complementary businesses of Provide Commerce and FTD," said Gregory B. Maffei, President and CEO of Liberty. "FTD has an extensive florist network while Provide Commerce has a proven ability to source their flowers directly from top growers. The combined company will be able to offer comprehensive and unique gifting services in the U.S. and around the world."
"FTD and Provide Commerce share a common mission and vision," said Chris Shimojima, CEO of Provide Commerce. "Together we will create outstanding and delighting gifting experiences for our customers for all of life's most important moments."
Summary of Strategic and Financial Benefits
The transaction is expected to create one of the most diversified, established and trusted floral and gifting companies in the world. FTD believes the combination will provide the following strategic and financial benefits:
Deepens Consumer Gifting Category: The combination of Provide Commerce's collection of respected and highly recognizable e-commerce brands, including ProFlowers, Shari's Berries and Personal Creations, with FTD's iconic brands, FTD and Interflora, and Mercury Man logo is expected to enhance FTD's already robust consumer floral and gifting category.
Strengthens Floral Network: The expected efficiencies and greater resources of this combination will enable FTD to further invest in new products, services and technology that are expected to directly benefit its vast network of florists and the floral industry as a whole.
Enhances Consumer Shopping Experience: FTD will immediately be able to offer a wider selection of floral and gifting products, providing consumers with greater convenience and choice.
Provides Significant Cost Synergies: The combination is expected to generate more than $25 million in annual synergies within 36 months of closing, with a goal of creating incremental value for FTD stockholders over time.
Adds Significant Committed Stockholder: Liberty will own approximately 35 percent of FTD at closing, reflecting Liberty's commitment and belief in FTD.
Increases Market Capitalization: The transaction will increase FTD's market capitalization and shares outstanding, which is expected to enhance the ability to access the capital markets in the future.
Under the terms of the transaction agreement Provide Commerce will become a wholly-owned subsidiary of FTD. The transaction is valued at $430 million, comprising 10.2 million shares of FTD common stock, valued at $309 million, based on the volume weighted average price of FTD's shares for the 10 day period ended July 28, 2014, and $121 million in cash. Upon closing, FTD will have approximately 29.2 million shares outstanding (based on FTD shares outstanding as of July 29, 2014) and Liberty will own approximately 35 percent of FTD shares outstanding.
Under the terms of the transaction agreement, Provide Commerce's RedEnvelope business will be excluded from the transaction and retained by Liberty.
The transaction is expected to close by the end of 2014, subject to customary closing conditions including approval by regulators and FTD's stockholders. FTD has secured financing commitments from Bank of America Merrill Lynch and Wells Fargo Bank, N.A. for this transaction.
Governance and Management
Upon closing of the transaction, FTD's management team will remain in place with Robert S. Apatoff continuing as President and CEO. Robert Berglass will continue as Chairman of the Board of FTD. FTD will expand its Board of Directors from seven to 11 directors with Liberty selecting four new directors for appointment to the Board.
While the transaction is being completed, FTD and Provide Commerce expect no change in their independent, existing operations, including customer service and product availability. Upon closing of the transaction, there will be no immediate changes to the operations of Provide Commerce's e-commerce brands.
Moelis & Company is serving as financial advisor to FTD and Jones Day is acting as legal counsel. Baker Botts L.L.P. and Cooley LLP are acting as legal counsel for Liberty and Provide Commerce, respectively.
Conference Call and Webcast
FTD will host a conference call and webcast at 9:00 a.m. ET today to discuss the strategic acquisition of Provide Commerce. The webcast and presentation slides will be available live and archived on the investor relations section of the Company's website at http://www.ftdcompanies.com. In addition, participants in North America may dial 877-407-4018 and International participants may dial 201-689-8471 to listen to the live broadcast.
FTD Companies, Inc. is a premier floral and gifting company. FTD provides floral, gift and related products and services to consumers, retail florists, and other retail locations primarily in the U.S., Canada, the U.K., and the Republic of Ireland. The business uses the highly-recognized FTD® and Interflora® brands, both supported by the iconic Mercury Man logo that is displayed in nearly 40,000 floral shops in 150 countries. FTD's portfolio of brands also includes Flying Flowers, Flowers Direct, and Drake Algar in the U.K.
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