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Tuesday, October 27, 2009
RueLaLa, SmartBargains selling for $350M to GSI Commerce
By Mass High Tech Staff
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Retail Convergence Inc., which runs both private sale website RueLaLa.com for high-net-worth buyers and off-price e-commerce website SmartBargains.com, has agreed to be bought for $350 million by
Pennsylvania-based GSI Commerce Inc. (Nasdaq: GSIC).
The initial payment under the agreement is a half-and-half cash and stock deal worth $180 million, followed by $170 million in earn-out payments based on RCI reaching an adjusted EBITDA of $51.9 million in fiscal year 2012. As a comparison, RCI is expected to make $15 million adjusted EBITDA in 2010.
Boston-based Retail Convergence was founded in February of 2008, and both launched RueLaLa and acquired SmartBargains in April of 2008. The company also closed on a $25 million venture round at that time. Since it launched, RueLaLa has featured private sale events from more than 300 brands, officials said, including Fendi, James Perse and Kate Spade. The company has more than 1.2 million members.
Retail Convergence CEO Ben Fischman will continue to lead RueLaLa and SmartBargains.com, and the company's almost 200 associates will stay on board following the acquisition, officials said.
The company comes from a successful lineage. Dennis Baldwin, Reebok’s CMO until 2006, and Stephen Karp and Steven Fischman, founders of Newton shopping center developer New England Development, are listed as directors of the online retailer, according to documents filed with the U.S. Securities and Exchange Commission. Ben Fischman is Steven Fischman’s son.
Baldwin’s Breakaway Partners I LLC and General Catalyst Group, a Cambridge-based venture capital firm that co-founded SmartBargains with managing director David Fialkow, are listed as two of Retail Convergence’s “beneficial owners,” the filing shows.
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