QVC-HSN merger looks to combat online shopping

Mike George, QVC

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Mike George, QVC

The radically shifting retail marketplace made it the right time for QVC to buy Home Shopping Network, according to QVC CEO Mike George.

Speaking Thursday on “Squawk on the Street,” George said despite thoughts the merger would happen in recent years, now was the right time because of the relative valuations of the two companies.

“This was a time where we felt like we could acquire the company on terms that would be attractive to the shareholders of QVC,” he said.

In an all-stock deal valued at $2.1 billion, Liberty Interactive will purchase the 62 percent of HSNi that it didn’t already own.

The combined company will have $14 billion in revenue and 23 million customers around the world, according to George.

“For folks just starting out with an entrepreneurial idea to have access to this combined HSN-QVC platform, the opportunities are extraordinary,” he said.

The merger would result in the third-largest e-commerce site, behind only Amazon and Wal-Mart, while synergies could range anywhere from $70 billion to $110 billion, according to the CEO.

“When you put all that together, it should be additive to the growth profile relative to what those companies can do on their own,” George said when asked about whether the companies’ heyday was over because of the rise of the internet.

The effort from two companies who mainly sell through television is widely seen as an effort to combat the rise of online shopping.

Trading in HSN’s shares, which are down nearly 9 percent this year, was halted just before the companies announced the deal. That company’s shareholders will receive 1.65 shares of Series A QVC Group common stock for each common share of HSNi, marking a 29 percent premium.

Liberty, whose share value has climbed 39 percent already this year, intends to continue to repurchase QVC Group common stock after the transaction closes, according to the statement.

QVC already owns 38 percent of HSN stock.

— CNBC’s Elisabeth Butler Cordova contributed to this report.

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