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Founder To Buy Back

By Keith Regan
Aug 13, 2001 12:19 PM PT (Nasdaq: BUYX) announced late Friday that founder Scott A. Blum will buy all outstanding shares in the e-tailer, ending its turbulent 18-month run as a public company.

Founder To Buy Back

Blum, through a corporation called SB Acquisition, offered 17 cents each -- Friday's closing price -- for all outstanding shares of The company's shares have traded as high as US$35 during the past year-and-a-half. said its board of directors has approved the deal, which is expected to close by the end of November pending shareholder approval.

In conjunction with the buyout, SB Acquisition will provide with US$9 million in short-term financing.

With about 136 million shares outstanding, according to the Aliso Viejo, California-based Internet retailer, the deal is valued at around $23 million. That value is a fraction of the $209 million raised through its initial public offering.

In fact, after its stock price rose more than 90 percent during its first day of trading on February 7, 2000, boasted a market capitalization of more than $3 billion.

Additionally, even before Blum took the e-tailer public, had garnered about $225 million in venture funding from Softbank.

Troubled Times

But despite rapid expansion to the UK, Canada and Australia, and abundant praise from consumers and the trade press for its selection and prices, soon started to slip, a decline that accelerated when the Nasdaq began its own lengthy descent.

Analysts, meanwhile, continually questioned's approach of selling items at or below cost in order to attract Web traffic that in turn could be used to sell advertising.

By early this year, the e-tailer was laying off workers and watching its chief executive officer and several board members depart abruptly.

Other Woes

The Nasdaq stock exchange informed in June that it would be delisted. At the time, analyst David Kathman predicted would find it nearly impossible to obtain additional funding.

And like a host of other dot-coms, has been sued by shareholders for allegedly working unlawfully with underwriters to drive up the price of its IPO.

Back in the Saddle

Blum served as CEO of until leaving the company to run ThinkTank, an e-business incubator also backed by Softbank.

Blum did not reveal his plans for, but the ThinkTank Web site indicates that the e-tailer will remain one of its member companies going forward.

According to a recent filing with the U.S. Securities and Exchange Commission, Blum sold more than 1.5 million shares in several transactions during early February at prices of 50 cents to 72 cents each, generating more than $600,000.

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