Headline Feeds
UK-based home shopping and catalog heavyweight Great Universal Stores (GUS) announced Friday that it has acquired British online merchant Jungle.com for £37 million in cash (55.5 million US$), including the repayment of about £12 million in debt (18 million US$).
Jungle.com is ranked second to Amazon.com as the most recognized e-tailer in the United Kingdom, having secured a strong position selling PCs, computer peripherals, software, music and videos. Since its launch a year ago, Jungle.com has been running an intense marketing campaign and spending heavily on development.
By the end of July, the e-tailer had 370,000 registered customers and sales of about £75 million (112 million US$).
Falling Value
Earlier in the year, analysts said Jungle.com was worth as much as £700 million (1 billion US$). After its initial valuation, however, the company saw its fortunes sink as technology shares plunged during a market meltdown in March.
Current estimates value the company at £37 million (55 million US$).
From the sale to GUS, founder and CEO Steve Bennett is expected to make around £7 million (10.5 million US$). Bennett will work with GUS for the next four years.
Predators Circling
GUS reportedly fended off competition from rival retailers Kingfisher and Dixons to acquire Jungle.com. According to Bennett, GUS gave the e-tailer the most muscle to expand.
"Of the many offers we had for the business, GUS was by far the best fit," said Bennett.
John Peace, chief executive of GUS, also called the deal a good strategic fit. "For the first time, GUS will be able to offer its customers a wide range of computer and office products via the most convenient channel, be it ordering via store, catalog or Internet," Peace said.
The takeover is expected to be completed next week.
E-Commerce Surge
The move by GUS to add an online channel comes at a time when online spending is growing exponentially in the Europe.
Online consumer spending in Britain, Wales and Scotland is expected to soar from $2.6 billion (US$) in 1999 to over $30 billion by 2005, according to Fletcher Research, the UK arm of Forrester Research (Nasdaq: FORR).
Online sales in the United Kingdom will account for 7.5 percent of the UK retail market in 2005, a significant rise over a 0.25 online market share in 1999, according to the report.
