Wall Street applauded on Thursday when online software retailer Beyond.com (Nasdaq: BYND) completed its acquisition of privately held competitor BuyDirect.com. Shares of Beyond.com rocketed 29 percent on Thursday, closing up 7-5/8 to 29-1/2.
Beyond.com’s purchase of BuyDirect.com is valued at approximately $123 million (US$). As Beyond.com has gained momentum, a major competitor has struggled. When Beyond.com announced the BuyDirect.com deal on February 22, the combination of the two companies still didn’t add up to the market capitalization of CompUsa (NYSE: CPU). But CompUsa has been hampered by weak sales at its brick-and-mortar stores, and shares of CompUsa are near their 52-week low. When the markets closed on Thursday, Beyond.com had a market cap of $924.3 million, compared to CompUsa’s $617.5 million.
Benefits for Beyond.com
Beyond.com says the acquisition of BuyDirect.com gives it 200,000 new customers and nearly one million overall customers. Beyond.com also gains a team of engineers that the company feels will help it expand its digital distribution presence.
“The strengths of BuyDirect.com are extremely complementary with our own and fundamentally support our vision to become the leading reseller of packaged and digital software to consumers, government agencies and corporate enterprises,” Mark Breier, president and CEO of Beyond.com, said when the deal was announced. “In particular, we believe BuyDirect.com’s engineering expertise will accelerate the continued development of Beyond.com’s digital downloading capabilities, giving the company an even greater competitive advantage.”
Beyond.com will also benefit from the addition of an exclusive software retailing partnership with the @Home Network and a strategic alliance with Web-based director Xoom.com. Beyond.com also adds technology content sites CNET and ZDNet to its list of partners.
“In our view, our combined companies simply can’t be beat in branding, distribution partners, content and technical expertise,” said Bong Suh, CEO of BuyDirect.com, when the deal was announced. “When considering the excellent product fit, complementary marketing and distribution channels, and the strong cultural match between our two companies, we believe this acquisition benefits our collective customers, publishers, employees and stockholders.”
Under the terms of the deal, Suh will now become vice president of corporate development for Beyond.com, focusing on working toward new partnerships.