The technology company will go private as its retail customer base grapples with turmoil and heavy e-commerce competition
By Jennifer SmithMarch 6, 2018 8:41 a.m. ET1 COMMENTS
CommerceHub Inc., a technology company that helps retailers manage e-commerce inventory, is being acquired by private-equity firms GTCR LLC and Sycamore Partners for $1.1 billion.
The company’s platform connects customers like Walmart Inc. WMT +0.77% and Best BuyCo. BBY -0.77% to suppliers that can ship online orders directly to consumers. Known as drop-shipping, the strategy helps retailers compete with rivals such as Amazon.com Inc. by offering an array of goods on their websites without having to keep the items in stock at warehouses and stores.
Based in Albany, N.Y., CommerceHub was spun off from Liberty Interactive Corp. in 2016 as a publicly traded company. The company had $111.1 million in annual revenue for 2017 and $9.9 million in net earnings.
GTCR and Sycamore said Tuesday they would acquire all shares outstanding of CommerceHub for $22.75 per share in cash, a 24.5% premium over the $18.27-per-share price at the close of trading on Monday.
The deal comes after CommerceHub last week reported adjusted net income of $10.7 million for the fourth quarter of 2017, up roughly 23% from $8.7 million the previous year. Revenue for the quarter was $36.7 million, up 12% year-over-year.
CommerceHub recently signed a deal with Macy’s Inc. and gained several new customers in 2017, its first full year as an independent company. Those gains were offset by bankruptcies across the retail sector and the loss of a retail customer.
“While our new customers ramp up, we will see a larger headwind in the first half of the year from these terminations and the bankruptcies,” Mike Trimarchi, the company’s chief financial officer, said in an earnings call last week.
CommerceHub is one of a growing array of technology and logistics companies providing services aimed at helping retailers compete with Amazon.com.
“Amazon is setting the tone for customer experience and assortment,” said CommerceHub Chief Executive Frank Poore, who will continue in that role under the new owners. “Most retailers don’t have the capital to outlay into inventory in built warehouses.”