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UPDATE 1-GSI Commerce to buy Retail Convergence for $180 mln

Tue Oct 27, 2009 5:44pm EDT

Stocks

   

* To pay $170 mln more by 2012 if some targets are met

* Says deal to add to adj 2010 earnings

* Sees Retail Convergence generating $230 mln rev in 2010

* Q2 loss $0.18/shr vs loss $0.30/shr year-ago

Oct 27 (Reuters) - GSI Commerce Inc (GSIC.O) said it agreed to buy e-commerce company Retail Convergence Inc (RCI) for $180 million in cash and stock, to strengthen its online sales platform.

GSI will also make a delayed payment of $170 million if Boston-based RCI meets certain performance targets through 2012.

The transaction is expected to add to GSI's adjusted earnings in 2010 and Retail Convergence is expected to generate $15.0 million of non-GAAP income from operations with revenue of $230 million in 2010, GSI said.

RCI operates RueLaLa.com and SmartBargains.com, an off-price e-commerce marketplace.

GSI also posted a narrower quarterly loss, helped mainly by an increase in service fee revenues, and said it expects a modest increase in fiscal 2009 net revenue from last year.

Net loss for the third-quarter was $9.4 million, or 18 cents a share, compared with $14.2 million, or 30 cents a share, a year ago.

Revenue for the quarter was $190.3 million, up 2 percent from last year.

Analyst's on average had expected a loss of 30 cents a share, on revenue of $185 million, according to Thomson Reuters I/B/E/S.

Shares of GSI closed at $20.96 Tuesday on Nasdaq. (Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Gopakumar Warrier)



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