Internet

QVC owner to buy Zulily shopping site for $2.4 billion

Liberty Interactive Corp., parent company of TV shopping network QVC, will acquire the popular mommy-oriented flash-sale site to create "a digital commerce powerhouse."

Zulily will remain based in Seattle. Getty Images

Liberty Interactive Corporation, the owner of TV shopping network QVC, is acquiring shopping site Zulily for roughly $2.4 billion in a move to create a "digital commerce powerhouse," Liberty announced Monday.

Focused on Internet-savvy moms, Zulily launched in 2010 offering flash sales that only last for a few days on high-end baby gear, toys and clothing. It went public in November 2013.

Zulily finished 2014 with 4.9 million active members, according to a regulatory filing, and is one of just a few retailers to exceed $1 billion in annual net sales in five years, growing from $331 million in annual sales 2012 to $1.2 billion in 2014.

But despite strong sales, Zulily's growth has weakened slightly and its shares have been in decline since February 2014. Its marriage with QVC gives it resources and global scale. And it helps QVC tap into a key market -- millennials.

"Zulily's younger customer demographic, personalization expertise and e-commerce capabilities will boost QVC," Liberty Interactive Corporation said in a release.

Zulily, launched by former Blue Nile executives Darrell Cavens and Mark Vadon, battles directly against other flash-sale sites, including Rue La La, One Kings Lane and Gilt. In May, Chinese online retailer Alibaba posted a regulatory filing showing a roughly 10 percent stake -- worth about $150 million -- in Zulily, with Alibaba's deep pockets giving the Seattle-based company a boost.

Liberty said it will pay the equivalent of $18.75 per Zulily share. QVC will use Seattle-based Zulily's technologies, which use historical and real-time data to customize products for millions of customers, Liberty said. QVC will also use Zulily's digital content production system. Meanwhile, Zulily will incorporate QVC's video expertise, as well as its customer finance systems, to improve its shopping experience.

Zulily President and CEO Cavens will remain in his position. The rest of Zulily's senior management team will remain in place and continue to report to him. Zulily Chairman Vadon will join the board of Liberty Interactive and provide counsel and support to the companies.

The boards of both companies have approved the deal, with the transaction expected to be completed in the fourth quarter of 2015, subject to regulatory approval and other conditions, according to the release.

Zulily shares are up $5.90, or nearly 50 percent, following news of the acquisition.