Amazon effect: QVC buys HSN for $2.6 billion

The combined company will generate $7.5 billion in online sales and $4.7 billion in mobile sales, putting them behind only Amazon and Walmart.

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Image via QVC.

Liberty Interactive, parent company to home shopping giant QVC, is buying rival HSN for around $2.6 billion.

QVC is technically buying the 62 percent of HSN that it didn't already own and merging it with the QVC Group, which includes QVC, Zulily, and now HSN. The group will split off and become an asset-backed stock later this year, with QVC and HSN continuing to operate as individual brands.

On the surface, the acquisition comes off as a clear market consolidation play, but it's also a move by QVC to remain competitive with Amazon and adapt to shifting customer buying habits. The merger will also provide a major boost to the ecommerce capabilities and performance of each brand.

SEE ALSO: QVC: How a media, retailing hybrid approaches digital transformation

QVC CEO Michael George said the combined company will generate $7.5 billion in online sales and $4.7 billion in mobile sales, putting them behind only Amazon and Walmart.

QVC had $8.68 billion in annual revenue in 2016, and 62 percent of its sales derive from ecommerce, while HSN had $3.5 billion in sales. Still, both QVC and HSN have struggled to keep pace with Amazon and its domination over the ecommerce landscape.

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

HSN has also been positioning itself as a lifestyle network and brand, which could bolster the combined resources of QVC Group and help create an integrated cross-media retail company capable of driving and maintaining customer loyalty. Overall, QVC and HSN will have about 11 million US shoppers and 23 million shoppers globally.

The combined company expects $14 billion in revenue in 2017.

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

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