As we saw in the first part of this series, Liberty Interactive (QVCA) is buying Zulily (ZU) for a combination of cash and stock. Zulily shareholders will receive $9.375 in cash plus 0.3098 shares of QVCA. The total consideration is $2.4 billion.
Management comments on the transaction
“As the world leader in video and eCommerce retail, QVC is dedicated to reimagining shopping, entertainment and community as one,” said Mike George, QVC president and CEO. “In Zulily, we see a like-minded brand that shares our passion for discovering great products, for delivering honest value, and for building long term relationships with customers. Our teams are committed to learning from and inspiring each other and leveraging our platforms in new ways to accelerate growth, serve our customers better, and realize the full potential of both of these extraordinary brands.”
The following conditions need to be satisfied in order for the deal to close:
- majority of Zulily shareholders tender
- Hart–Scott–Rodino Antitrust Improvements Act filing
Nonsolicitation agreement and breakup fee
Zulily has a nonsolicitation agreement with a fiduciary out. This means that prior to shareholder approval of the transaction, Zulily can discuss a merger with another suitor, assuming it’s approached.
If a bidder happens to come in and top the Liberty Interactive, Zulily will owe Liberty Interactive a breakup fee of $79 million.
How Liberty Interactive will finance the deal
Liberty Interactive will finance the cash portion of the deal with cash on hand and its revolving debt facility. The transaction isn’t subject to financing.
Merger arbitrage resources
Other important merger spreads include the deal between Baker Hughes (BHI) and Halliburton (HAL) or the merger between Freescale Semiconductor (FSL) and NXP Semiconductor (NXPI). For a primer on risk arbitrage investing, read Merger arbitrage must-knows: A key guide for investors.
Investors interested in trading in the tech sector should look at the Technology Select Sector SPDR Fund (XLK).