SmarterKids signed an all-stock deal with Earlychildhood.com, which makes and markets educational products and toys, mostly for toddlers and infants. Under the terms of the deal, shareholders of Earlychildhood will control two-thirds of the new company's stock while shareholders of SmarterKids will receive the remaining third.
The combined revenue from both companies is about $69 million, said Al Noyes, executive vice president for Needham, Mass.-based SmarterKids. Noyes said he will become chief executive of the new company, which does not yet have a name.
Online-only retailers--or so-called pure-play sites--are quickly disappearing. The merger is the latest example of an online retailer that is abandoning its pure-play approach, through either an acquisition, a merger or insolvency.
Some pure-play Internet companies that have recently said they will shut down include Garden.com, which announced Wednesday it was ceasing its e-commerce operations; online grocer Streamline.com; Pets.com; Furniture.com; and MotherNature.com.
The SmarterKids-Earlychildhood merger also marks the end of one of the last pure-play Web toy stores. Last holiday season, five Internet-only toy merchants squared off. Toysmart.com and Toytime.com have since closed down. Amazon.com merged its toy operations with Toysrus.com--the Internet unit of offline toy giant Toys "R" Us. And now, SmarterKids' deal with Earlychildhood will make Santa Monica, Calif.-based eToys one of the last pure-plays standing.
Privately held Earlychildhood said in a news release that it is profitable and that it earned $65 million in pro forma revenue for the nine months ended Sept. 30.
During the same nine-month period, 2-year-old SmarterKids earned $4.5 million in revenue. The company concentrated on selling educational toys online. The merger is expected to be finalized sometime in the spring of 2001, Noyes said.