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Global Sports keeps expansion going

The e-commerce site builder will acquire luxury goods e-tailer Ashford.com as it continues to expand its range beyond sporting goods.

Global Sports, a company that operates Web sites for retailers, will acquire luxury goods store Ashford.com for about $14 million in cash and stock, the companies said Friday.

Ashford stockholders will receive about 25 cents a share in Global Sports stock and cash under the terms of the deal. Global Sports said it expects to issue approximately 430,000 shares of stock and pay approximately $7.1 million in cash in exchange for all the outstanding shares of Ashford.

The deal is expected to close in the fourth quarter, Global Sports said.

Providing services to online stores has proven more lucrative in some cases than the stores themselves. Global Sports, which primarily built and operated Web sites for sporting goods stores and professional sports teams, has signed several deals recently signaling it is ready to expand its e-commerce scope.

Two weeks ago, King of Prussia, Pa.-based Global Sports said it agreed to operate Kmart's e-commerce site, BlueLight.com.

But by buying Houston-based Ashford, Global Sports will enter a vastly different sector than any that it has tried before.

The company said it intends to use Ashford's sales, merchandising and fulfillment teams to build and operate Web sites for other online stores that sell luxury goods and corporate gifts. Global Sports spokeswoman Patty Henderson said Ashford's Web site will continue to operate.

Monday, Global Sports stock closed at $16.51. The company's share price has seen a 52-week low of $2.37 and a high of $19.87.

In Ashford's case, the deal could not have come soon enough as luxury goods have proven to be a tough sell online. Companies such as Miadora.com and Adornis.com have already closed their doors online.

Only two years ago, Ashford was considered an up-and-comer. The luxury goods merchant attracted blue-chip investors, including Amazon.com.

In a deal that would later haunt Amazon, the Seattle-based e-tailer swapped advertising and marketing considerations in exchange for 7 million shares of Ashford stock. In January 2000, when the deal was cut, the stock was worth about $90 million. Based on the 25 cents a share that Global Sports is paying for Ashford, Amazon's 7 million shares are worth about $1.7 million.

Prior to the sale, Ashford was trying to avoid being delisted from the Nasdaq for not meeting the minimum stock price. Ashford said in a statement that as of June 30, it had a tangible net worth of $27.9 million, including about $8.6 million in cash and accounts receivable. That number also included about $18.4 million in inventory.

Global Sports said Friday that the deal will push its earnings above analyst expectations for next year. Net revenue is now expected to exceed $200 million compared with the current average of analysts' expectations of $185 million.