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Home / Knowledge / News / Information Technology / GSI to enter private sale market with Rue La La
GSI to enter private sale market with Rue La La
28
Oct '09
GSI Commerce Inc., the leading provider of e-commerce and interactive marketing services, announced it has signed a definitive agreement to acquire Retail Convergence Inc., a Boston, Mass.-based company that operates RueLaLa, a leader in the private sale space and SmartBargains, an off-price e-commerce marketplace. The acquisition of Rue La La and SmartBargains furthers GSI's evolution as an innovative global e-commerce platform capable of managing all aspects of online sales and interactive marketing for leading retailers and consumer brands.

The transaction is valued at up to $350 million, including $180 million at closing (50 percent cash, 50 percent stock) and an earn-out of up to $170 million. To reach the maximum earn-out, RCI will need to achieve non-GAAP income from operations (commonly referred to as adjusted EBITDA) of $51.9 million in fiscal year 2012 (a complete description of the earn-out is contained later in this release). At the end of September 2009, RCI had cash of $7.5 million and no debt. In 2010, RCI is expected to generate at least $230.0 million of revenue, $7.0 million of income from operations and $15.0 million of non-GAAP income from operations (1).

"We are excited to enter the private sale market with industry-leader Rue La La. We believe this new way of shopping will continue its remarkable growth trajectory, based on its benefits to brands, retailers and consumers,” said Michael G. Rubin, chairman, president and CEO of GSI. “Rue La La's short, intense events are entertaining and engaging. They have proven to be an effective solution for brands and retailers to sell significant opportunistic merchandise in a compressed time period,” said Rubin.

Launched in April 2008, Rue La La is a members-only, e-commerce destination offering premier brands at discount prices during two-day private sale events in the fashion, accessories, footwear, home, jewelry and other emerging merchandise categories. Since inception, Rue La La has featured private sale events from more than 300 brands.

SmartBargains.com, launched in 1999, is a leading consumer marketplace for the sale of off-price merchandise across a wide cross-section of categories.

“The private sale sector is changing e-commerce through exceptional levels of virality, dynamic customer experience and highly engaged members,” said Ben Fischman, CEO of Retail Convergence. “Since launching in April, 2008, Rue La La has experienced tremendous growth and we are excited to further our momentum by becoming part of the GSI family. GSI's extensive infrastructure, marketing services expertise and relationships with retailers and brands will provide brands and members with an even more robust experience, accelerating Rue La La's global potential and positioning us for leadership in this exciting e-commerce segment.”

Fischman will continue to lead Rue La La and SmartBargains, reporting to Michael Rubin. RCI's experiencedand growing team of nearly 200 associates will remain intact following the acquisition to support the continued expansion of Rue La La and SmartBargains.


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