Online computer e-tailer egghead.com announced today that its shareholders have approved a $400 million (US$) merger with auction and surplus site Onsale, Inc.
The merger comes as companies such as Buy.com, Outpost.com and Amazon.com are aggressively expanding their offerings and encroaching upon the two companies’ market share. Under the circumstances, industry observers feel that it was a wise move by both companies to pool their resources.
Egghead disclosed that the company met the required supermajority needed for shareholder approval under Washington state law. In Washington, where Egghead.com is incorporated, a vote of two-thirds of outstanding shares was needed to approve the merger.
Transformation From Brick And Mortar Complete
“This merger completes the transformation of Egghead started in 1997 from traditional brick and mortar stores to the Internet,” explained George Orban, Egghead’s chairman and CEO. “With over $500M in annualized revenue based on current trends, the new Egghead.com combined with Onsale will be one of the leading Web-based retailers in the world.”
Orban will become chairman of the merged entity, which will be called Egghead.com. Onsale chairman and CEO Jerry Kaplan will serve as president and CEO. The company will be headquartered in Menlo Park, California, where Onsale is currently located.
Over the next two weeks, Egghead.com will trade under a series of stock symbols on the Nasdaq. For today only, the company will trade as “ONSL.” Starting tomorrow, it will trade for ten days as “EGGSD,” and then find a permanent place on the Nasdaq under the “EGGS” symbol.
Formed by the 1999 merger of Onsale and the original Egghead.com, the company is an online retailer and auctioneer of computer hardware, software, peripherals, and accessories, including excess, reconditioned, and closeout brand-name computer products.
Egghead.com also sells consumer electronics, sporting goods, and vacation packages. In addition to its online offerings, the company sells merchandise over the phone and through catalogs. Former shareholders of the original Egghead.com own about 47 percent of the company.
Onsale co-founders Jerry Kaplan, Alan Fisher, and Razi Mohiuddin own approximately 27 percent.
The company lost $14.7 million on revenue of $208 million in its fiscal year ending December 1998. However, its stock was up 2 9/16 to 26 1/2 by noon, as Wall Street appeared to be reacting favorably to the news.