QVC, HSN Merging To Battle Amazon

QVC and Home Shopping Network, two of the most well-known TV home-shopping hubs, are combining further as they look at aggressive growth by Amazon and consumer shopping habits shifting to internet-based retail.

Liberty Interactive, which owns QVC and already owns 38 percent of HSN, will buy the rest of Home Shopping Network for about $2.6 billion in a stock deal.

The buyout comes months after Mindy Grossman left as CEO of HSN to take the reins of Weight Watchers. Under Grossman, HSN worked to build its ecommerce presence and transform itself into a lifestyle network. It now derives half of its revenue from ecommerce, featuring more than 50,000 products on its website along with broadcasting to more than 90 million households.

Both QVC and Home Shopping Network have been dealing with sluggish sales as Amazon dominates the online shopping.

"It has been a tough period," said Rod Little, HSN's chief financial officer and interim head, in a conference call on Thursday to discuss the deal. "We are not happy with the performance. It's part of why we are here today, I guess."

Liberty, which has owned a stake in HSN since 2009, said buying the rest of the company will boost the merged company's ecommerce capabilities, cut costs and offer marketing opportunities, among other benefits. 

"The increased scale of this combination will allow us to more effectively compete, we think, in a changing and evolving retail and digital environment," Liberty CEO Greg Maffei said in the call. 

QVC CEO Michael George said the combined company will generate $7.5 billion in online sales and $4.7 billion in mobile sales, ranking it behind only Amazon and Walmart (WMT) in terms of the dollar value of ecommerce transactions.  

"By combining companies, we believe will be able to accelerate innovation, enhance the customer experience, increase customer value and put ourselves in an even stronger position to help shape and lead the nation generation of shopping," George, who will head the merged business, on the call.   

Home Shopping Network's consumer brands include home furnishings vendor Frontgate and home decor and clothing seller Garnet Hill. QVC's properties include apparel seller Zulily and online invitation website Evite.

Liberty, based in Englewood, Colorado, will issue 53.4 million shares of QVC Series A common stock to HSN shareholders. It said Thursday that's the equivalent of paying $40.36 per share for HSN Inc. of St. Petersburg, Florida.

That would be a 29 percent premium to the stock. Shares of HSN surged $10.30, or 33 percent, to $41.60 in morning trading.

The deal is expected to close in the fourth quarter.

The Associated Press contributed with this report.