Acquisition Expands Size and Scope of GSI's Interactive Marketing
Services Capabilities in U.S. and Europe; e-Dialog to Operate as
Stand-Alone Subsidiary
KING OF PRUSSIA, Pa., and LEXINGTON, Mass., Jan. 24
/PRNewswire-FirstCall/ -- Leading e-commerce and multichannel solutions
provider, GSI Commerce Inc. (Nasdaq: GSIC) today announced it has signed a
definitive agreement to acquire e-Dialog Inc., a Lexington, Mass.-based
market-leading provider of advanced e- mail marketing services and
solutions to more than 100 blue-chip companies in the U.S. and Europe. The
acquisition will significantly expand the breadth and depth of GSI's
interactive marketing services capabilities, its reach into existing and
new vertical markets, and its growing European presence. e-Dialog will
benefit from GSI's large scale and market-leading position in e-commerce
and multichannel services.
"e-Dialog is a high-performing company with a promising growth
trajectory and is a perfect strategic, geographic and financial fit for
GSI. We see the market demanding more sophisticated marketing services
every day and have made it an imperative at GSI to provide our partners
with robust and advanced services like e-Dialog's," said Michael G. Rubin,
chairman and CEO of GSI Commerce(R). "We are really excited to expand GSI
capabilities in this area. We believe e-mail marketing has highly
attractive fundamentals, which is evidenced by the strength and impressive
projected growth of the industry. According to the Direct Marketing
Association, e-mail offers online marketers the highest rates of ROI
compared to any other marketing channel, and with a 25 percent increase in
spending expected in 2008 it is set to drive nearly $27 billion in sales.
This makes it an integral component of a balanced marketing program - one
we believe is less influenced by downturns in the economy.
"After a broad evaluation of the industry we found e-Dialog to have the
strongest services capabilities and most sophisticated technology,"
continued Rubin. "And like GSI, they demonstrate a true passion for adding
strategic value to their clients' marketing programs - beyond technology
solutions alone. We have complete confidence that integrating e-Dialog's
solutions with our e-commerce technology platform will help our partners
bring their e- marketing efforts to the next level and drive increased
growth and partner satisfaction."
Under the definitive agreement, which has been approved by the boards
of directors of both companies and the shareholders of e-Dialog, GSI will
acquire privately held e-Dialog for $157 million, including cash of $147.8
million and restricted shares of GSI Commerce valued at $9.2 million. In
addition, GSI Commerce will be obligated to make an additional cash payment
of $750,000 in fiscal 2009 if net revenue targets are achieved in fiscal
2008. The portion of consideration that is restricted shares of GSI
Commerce will go entirely to e- Dialog employees, including its senior
management. The acquisition is expected to close within 30 days and is
subject to customary closing conditions and expiration or termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Following the close, e-Dialog will operate as a wholly owned subsidiary of
GSI, remaining operationally intact and retaining such assets as its brand
name, offices, and employees.
"After nearly 10 years of building e-Dialog to be a leading, service-
oriented e-mail marketing solutions provider in the U.S. and Europe, it is
the right time to move the company to its next stage by joining GSI
Commerce," commented John Rizzi, president and CEO of e-Dialog. "As an
independent operating unit of GSI we will continue our focus on being a
leading e-mail marketing solutions provider and driving our clients to
achieve exceptional performance in this channel. Our clients will also
benefit from GSI's experience in other marketing services such as search,
affiliate marketing, and Web site creative services. Overall this is a
perfect fit because our e- commerce and e-mail marketing service offerings
complement one another so seamlessly and with almost no overlap, requiring
minimal material changes to our businesses and allowing us to focus 100
percent on continued growth."
Founded in 1997, with offices in Lexington, Mass., Seattle, New York
City and London, e-Dialog is a proven leader among e-mail marketing
solutions providers. e-Dialog was named a leader in the December 2007
Forrester Wave: Email Marketing Service Providers, Q4 2007, and received
the highest combined score for top performing e-mail marketing providers
among service-oriented ESPs based on business value and market suitability
from JupiterResearch in 2005 and 2006. GSI's acquisition of e-Dialog
highlights the valuable relationship between e-commerce and e-mail, and
offers marketers ample opportunity to capitalize on the promise of more
closely aligned efforts. Promotional e-mail messages influence roughly
one-half of online purchases(1), which are projected by JupiterResearch to
reach $171 billion in 2011. Further, Jupiter has determined that when
e-mail is integrated with Web clickstream data, marketers can generate
nearly four times more revenue compared with marketers using broadcast
mailings(2).
"We've worked with both e-Dialog and GSI separately for many years and
we are thrilled to see them coming together. We look forward to enhancing
our efforts as a result," said Bob O'Keefe, senior director, NFL Direct.
"From a partner perspective, it makes complete sense for our e-commerce and
e-mail efforts to be closely coordinated so we can harness important
insight to make our marketing more effective and drive long-term profitable
relationships with our fans."
On a trailing 12-month basis through Sept. 30, 2007, e-Dialog recorded
net revenue, income from operations and adjusted EBITDA of approximately
$33.9 million (+59 percent year-over-year), $5.2 million (+151 percent
year-over- year) and $6.5 million (+112 percent year-over-year),
respectively. Adjusted EBITDA equals income from operations plus $1.3
million of depreciation and amortization expense.
"e-Dialog has long been a respected and important company in our
portfolio," commented Jim Matheson, general partner of Flagship Ventures.
"The management team started with a vision of building a world-class
company that would redefine the technology-enabled marketing services
industry and, over the past eight years, never wavered from this mission.
They executed flawlessly and relentlessly, with superior results evidenced
by broad industry praise, an envious stable of blue-chip clients in the
U.S. and Europe and now this significant transaction with GSI Commerce.
We're honored to have been part of the e-Dialog team and have complete
confidence in their continued success."
Gridley & Company LLC served as the exclusive financial advisor to GSI
in the transaction and Skadden Arps served as legal advisor to GSI.
Jefferies & Co. served as the exclusive financial advisor to e-Dialog in
the transaction and Ropes & Gray served as legal advisor to e-Dialog.
(1) US E-mail Marketing Consumer Survey, 2006: E-mail Marketing Attitudes
and Behavior (JupiterResearch, February 2007)
(2) The Road to Relevance: Improving Campaign Results Through Targeting
(JupiterResearch, January 2007)
Conference Call Today
GSI Commerce has scheduled a conference call for 10 a.m. EST today to
discuss the company's preliminary fiscal year 2007 operating results,
preliminary fiscal year 2008 guidance and its agreement to acquire
e-Dialog.
Live Conference Access:
-- Phone - Dial 1-800-659-1942, passcode 12656761 by 9:45 a.m. EST today.
-- Web - Go to http://www.gsicommerce.com, and click on the Webcast tab
provided, or go to http://www.streetevents.com, where the conference
call will be broadcast live. Please allow at least 15 minutes to
register, download and install any necessary audio software.
Conference Replay:
-- Phone - Dial 1-888-286-8010, passcode 55423199. The replay will be
available one hour after the completion of the call and remain
available through Feb. 12.
-- Web - Go to http://www.gsicommerce.com, and click on the Webcast tab
provided. Access will remain available through Feb. 12.
Non-GAAP Financial Measures
In this release and on the conference call, we present the non-GAAP
financial measure adjusted EBITDA for e-Dialog. This non-GAAP measure is
not intended to be considered in isolation of, as a substitute for, or
superior to GAAP financial information. We have included a reconciliation
in the body of this release of this non-GAAP measure to the nearest GAAP
measure.
We use adjusted EBIDTA for financial and operational decision making
and as a means to evaluate our performance and the performance of e-Dialog.
In our opinion, this non-GAAP measure provides meaningful supplemental
information regarding e-Dialog's performance. We believe that both
management and investors benefit from referring to this non-GAAP financial
measure in assessing our performance and the performance of e-Dialog and
when planning, forecasting and analyzing future periods. These non-GAAP
financial measures also facilitate management's internal comparisons to our
historical performance and liquidity as well as to the operating results of
comparable companies. We believe this non-GAAP financial measure is useful
to investors both because (1) it allows for greater transparency with
respect to a key metric used by management in its financial and operational
decision making and (2) it is used by institutional investors and the
analyst community to help them analyze the health of our business.
We define adjusted EBITDA as income from operations excluding
stock-based compensation, depreciation and amortization expenses and
acquisition-related integration expenses. We consider adjusted EBITDA to be
a useful metric for management and investors because it excludes certain
non-cash and non- operating items. Because of varying available valuation
methodologies, subjective assumptions and the variety of award types that
companies can use when valuing equity awards under SFAS 123R, we believe
that viewing income from operations excluding stock-based compensation
expense allows investors to make meaningful comparisons between our
operating performance and those of other businesses. Because we are growing
rapidly and operate in an emerging and rapidly changing industry, we
believe that our level of capital expenditures and consequently the level
of depreciation and amortization expense relative to our revenues could be
meaningfully greater today than it will be over time. As a result, we
believe it is useful supplemental information to view income from
operations excluding depreciation and amortization expense as it provides a
potential indicator of the future operating margin potential of the
business. We believe the exclusion of acquisition-related integration
expenses permits evaluation and a comparison of results for on-going
business operations, and it is on this basis that management internally
assesses the company's performance.
About GSI Commerce
GSI Commerce(R) is a leading provider of e-commerce and multichannel
solutions that enable retailers, branded manufacturers, entertainment
companies and professional sports organizations to operate e-commerce
businesses. We provide solutions for our partners through our integrated e-
commerce platform, which is comprised of four components: technology,
customer care, fulfillment and marketing services. We provide e-commerce
solutions for approximately 85 partners.
About e-Dialog
Established in 1997, e-Dialog is a proven provider of precision e-mail
marketing solutions. Through a unique combination of marketing intelligence
and relevance enabling technologies, e-Dialog enables some of the world's
most recognized brands, such as American Eagle Outfitters, Avis, Boots, BMG
Music Service, British Airways, CBS, Dell, FT.com, Hewlett Packard EMEA,
Nintendo, the NFL, Reuters, the Royal Bank of Scotland group of companies,
and The TJX Companies to maximize long-term customer value with
contextually targeted communications. The company's service offerings
empower large, multifaceted companies like these to enhance
permission-based e-mail marketing efforts through fully integrated,
cross-channel communications, including dynamically printed direct mail,
RSS and mobile messaging.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements made in this release, other than statements of historical fact,
are forward-looking statements. Specifically, statements regarding the
expected timing of the closing of the acquisition, the ability of GSI
Commerce Inc. and e-Dialog Inc. to close the acquisition, the expected
benefits of the acquisition, the expected performance and features of
e-Dialog products services and any GSI Commerce and e-Dialog combined
products and services, the expected integration-related operating and
capital expenditures, and the expected impact of the acquisition on the
GSI's financial results are forward-looking statements. In addition, the
words "anticipate," "believe," "estimate," "expect," "intend," "may,"
"plan," "will," "would," "should," "guidance," "potential," "opportunity,"
"continue," "project," "forecast," "confident," "prospects," "schedule" and
similar expressions typically are used to identify forward-looking
statements. Forward-looking statements are based on the then- current
expectations, beliefs, assumptions, estimates and forecasts about the
business of GSI Commerce. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions which are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or implied by these forward-looking
statements. Factors which may affect GSI Commerce's business, financial
condition and operating results include the risk that the planned
acquisition may not close on the term agreed upon or at all, risks related
to the acquisition, including unanticipated liabilities and expenses, the
effects of changes in the economy, consumer spending, the financial markets
and the industries in which GSI Commerce and its partners operate, changes
affecting the Internet and e-commerce, the ability of GSI Commerce to
develop and maintain relationships with strategic partners and suppliers
and the timing of its establishment, extension or termination of its
relationships with strategic partners, the ability of GSI Commerce to
timely and successfully develop, maintain and protect its technology,
confidential and proprietary information, and product and service offerings
and execute operationally, the ability of GSI Commerce to attract and
retain qualified personnel, the ability of GSI Commerce to successfully
integrate its acquisitions of other businesses and the performance of
acquired businesses. More information about potential factors that could
affect GSI Commerce can be found in its most recent Form 10-K, Form 10-Q
and other reports and statements filed by GSI Commerce with the SEC. GSI
Commerce expressly disclaims any intent or obligation to update these
forward-looking statements.
Contact:
GSI Commerce, Inc. e-Dialog
Corporate Marketing Jean Borgman
610.491.7474 508.451.5944
Fax: 610.265.2866 jborgman@e-dialog.com
news@gsicommerce.com
|
