August 15, 2000 3:50 PM PDT

Wine sites hope merger will create right blend

Wine.com and WineShopper.com announced today they will merge, with hopes that a combined company will hold greater appeal for investors.

Wine.com CEO Bill Newlands will serve as chief executive of the combined company, while WineShopper CEO Peter Sisson will become vice chairman and chief strategy officer. Terms of the deal between the privately held companies were not disclosed.

"It makes an awful lot of sense (because) the capital markets are getting very tight these days for (business-to-consumer) plays," said Ken Cassar, senior retail analyst with Jupiter Communications.

Cassar said the merger makes further sense because online liquor companies face immense regulatory difficulties regarding the sale and transportation of alcohol. "In order to sell in 50 states, a merger really needs to carve out strategies," Cassar said.

Newlands said in a statement that the two companies will "leverage our combined resources, management expertise, and established industry relationships to provide the best customer experience in the online wine space."

"When we looked at our assets they're really quite complementary," WineShopper's Sisson said in a cell phone interview while he was on his way to Napa to talk with employees. "It really made sense."

WineShopper's Web site will remain in operation until the end of the year. The companies will then release a redesigned Wine.com site.

Sisson said the newly combined company is seeking a new round of venture financing and would consider an initial public offering as a financing option. "From an investor's point of view, it's more attractive to place their bets on a single clear winner."

The merger comes about two months after food delivery companies Webvan and HomeGrocer.com merged in a $1.2 billion deal.

Wine.com and WineShopper have strategic partnerhips with Amazon.com, The Wall Street Journal Interactive Edition, and The New York Times on the Web. The companies said in a press release that the market for wine is $100 billion worldwide.

 

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