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Webvan lays off 50 in wake of HomeGrocer deal

Following the acquisition of its rival, online grocer Webvan eliminates overlapping jobs at HomeGrocer's headquarters.

Webvan today said it has laid off 50 workers as part of its acquisition of HomeGrocer.com.

The layoffs, which affected one out of every six workers at HomeGrocer's main office in Kirkland, Wash., were mostly in white-collar jobs that overlapped with similar positions at Webvan's Foster City, Calif., headquarters, according to Webvan spokesman Bud Grebey.

Webvan's acquisition of HomeGrocer, announced in June, closed Tuesday, and the workers were told of the layoffs that day, Grebey said. The job cuts could be the last for a long while, as the company expects to expand operations in Seattle, he added.

Webvan, which began operations in San Francisco over a year ago, said it plans to hire more than 500 new employees to work at HomeGrocer's two former Seattle-area distribution centers.

With the acquisition, Webvan solidified its position as the largest purely online supermarket. The company continues to expand. It began servicing Atlanta, Chicago and Sacramento, Calif., this year, although its stock price continues to decline.

Webvan's offer of 138 million shares for HomeGrocer was valued at $1.2 billion based on the company's $7.30 share price at the time. As of late trading today, Webvan was at $4 per share, making the value of the deal worth roughly $550 million.

When the acquisition was announced, Webvan said that because the companies were not operating in the same cities, there would be very few layoffs. HomeGrocer offered its service in Dallas, Seattle, Los Angeles, San Diego and Portland, Ore.

"One of the reasons that the merger made so much sense was that there was room for some consolidation and cost cutting," Grebey said.