The deal will involve swapping shares of Cyberian for PC Connection stock. The value of the deal will be based on Cyberian's revenue between June and August, and on how well PC Connection's stock does in the 10-day period before the deal closes. Cyberian can get out of the deal if PC Connection's stock drops below $10.125 per share unless PC Connection agrees to increase the exchange ratio to maintain the value of the deal.
Each company's board has unanimously approved the transaction, which is expected to close in the third quarter. The agreement is still subject to the approval of Cyberian shareholders and other closing conditions.
PC Connection, based in Merrimack, N.H., also will purchase from Cyberian up to 19.9 percent of its common stock at a price of 51 cents per share, which will become exercisable upon certain conditions. Starting now as part of the deal, PC Connection has agreed to provide Cyberian with a working-capital line of credit of up to $3 million and an inventory line of credit of up to $5 million.
The agreement comes as Cyberian, which also provides business services such as Web site design, maintenance and order management, wrestles with a waning stock price, financial woes and layoffs.
Just last month, the company, based in Kent, Conn., cut 30 percent of its work force and replaced CEO Katherine Vick, who has also resigned from the board of directors. Chief Financial Officer Paul Williams III and directors James Preston and Michael Murray also left the company last month.
In its fourth quarter, Cyberian posted a wider-than-expected loss, and it had previously warned that softening demand for PCs would hurt its quarterly results. One of the first online retailers, Cyberian also recently suffered from a plunging stock price. In recent weeks, shares of the company closed below $1 and hit a 52-week low of 13 cents.
Meanwhile, shares of PC Connection also fell. The stock, which hit a 52-week high of $70.25 and low of $8.12, has recently been trading in the mid to high teens. On Tuesday, it closed at $16.03.
Cyberian will continue to operate under its own brand from its current headquarters. CEO Darryl Peck will remain with the company after the acquisition, reporting to Robert Wilkins, executive vice president of PC Connection.