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Will Onsale merger save Egghead?
July 14, 1999 -
Egghead, Onsale merge in $400 million deal
July 14, 1999
The deal was announced in July amid increased pressure to consolidate. Before the merger, the two companies faced the prospect of competing on their own against Amazon.com, as the Internet retailing giant invaded each of their niches. Amazon now sells consumer electronics and offers auctions, and recently encroached even further by offering software sales.
Egghead.com, the name of the combined companies, is headquartered in Menlo Park, Calif., with operations in Vancouver, Wash. Egghead.com, once a brick-and-mortar software retail chain, shut its stores and moved online exclusively last year after suffering falling sales and profits.
The company predicts a 45 percent to 50 percent increase in revenue in the year 2000, and 35 percent to 40 percent revenue growth the year after. It also expects to reach profitability at the beginning of 2002.
Egghead.com will sell new and surplus computer products, consumer electronics, sporting goods and vacation packages. Through its auction site--Onsale.com--the company offers bargains on excess and close-out goods and services.
"With the approval of the Egghead stockholders last Friday, we are now executing on our integration plans," Jerry Kaplan, Egghead.com's chief executive, said in a statement.
The company said it is open for business under a unified Web site, and is offering a free shipping promotion to celebrate the merger.
Complicated logistics will force the Egghead.com to trade under changing stock symbols over the next 10 trading days on the Nasdaq stock exchange. Today, Egghead will trade under the "ONSL" symbol. Beginning tomorrow, it will trade under the "EGGSD" symbol for 10 trading days. After 10 days, Egghead.com will be traded under the "EGGS" symbol.
Egghead.com shareholders receive 0.565 shares of Onsale common stock in exchange for each share of Egghead common stock.
Bloomberg contributed to this report.
