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QVC to acquire its biggest rival in $2 billion-plus deal

BY Marianne Wilson

In a deal that will bring together two longtime home shopping rivals, QVC is acquiring the Home Shopping Network.

Liberty Interactive Corp., owner of QVC, currently owns 38.2% of HSN parent HSNi. Under the agreement announced Thursday, Liberty will acquire the remaining 61.8% stake, making HSNi a wholly-owned subsidiary. The all-stock transaction has an enterprise value of $2.6 billion.

"The addition of HSN will enhance QVC’s position as the leading global video e-commerce retailer," said Greg Maffei, president and CEO, Liberty Interactive. "Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms."

Both QVC and HSN have been challenged in recent years amid a decline in traditional TV viewership and the rise of online shopping. Combing the two companies will allow them to benefit from economics of scale, cut costs and compete better against such retail giants as Amazon and Walmart. The two companies together will rank as the third largest mobile and e-commerce retailer in North America, according to QVC.

HSNi consists of HSN and Cornerstone, whose retail brands include Ballard Designs, Frontgate, Garnet Hill, Grandin Road and Improvements. Post-closing, HSNi headquarters will remain in St. Petersburg and will be overseen by Mike George, president and CEO of QVC.

Once the deal is completed, Liberty Interactive plans to spin off its nonretail assets and rebrand the remaining operations as the QVC Group, the New York Times reported. It will be comprised of QVC, HSN and flash sale site Zulily, which will all remain standalone brands under the QVC Group umbrella. The combined company is expected to have approximately $14 billion in revenue.

The deal comes on the heels of the departure in May of HSN CEO Mindy Grossman, who left the company after 11 years to become president and CEO of Weight Watchers International.

"Joining the QVC Group will give us instant access to global consumer markets, a leadership team with deep expertise and a global perspective, and the opportunity to further strengthen our content-based brand portfolios in a changing retail landscape,” said Arthur C. Martinez, chairman, HSNI. “We have both been innovators in a growing and dynamic retail environment with a unique vision of what shopping should be, and as new technologies continue to change our everyday lives, together we can develop the next generation of shopping for the next generation of consumers.”

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Former Target merchandising exec joins specialty coffee retailer

BY Marianne Wilson

A Target veteran has joined the leadership team of Caribou Coffee.

John Butcher, who most recently served as senior VP merchandising: beauty and DermStore, has been tapped as president of Caribou Coffee. Butcher joined Target in 1997, working his way up through the ranks serving in various operations and merchandising roles, including serving as VP and general merchandise manager, electronics.

He was named to his most recent position in 2016, after having served as senior VP, category roles. Butcher left Target in June amid a major restructuring of the chain's merchandising division.

Based in Minneapolis, Caribou Coffee is the second largest company-operated premium coffeehouse in the United States. It has more than 400 domestic locations in 18 states and 200 international franchise stores in 10 countries.

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Specialty denim retailer files for Chapter 11

BY Marianne Wilson

Premium denim brand True Religion Apparel Inc. has struck a deal to erase $350 million of its debt.

The company announced Wednesday that it has filed for Chapter 11 bankruptcy protection and signed a restructuring agreement with the majority of its lenders, including private equity owner TowerBrook Capital Partners. It listed assets and liabilities in the range of $100 million to $500 million.

True Religion said the agreement will reduce its debt by over $350 million and convert it into the substantial majority of the reorganized company’s equity. The company expects it will take 90 to 120 days to obtain confirmation of its pre-arranged plan by the bankruptcy court.

Founded in 2002, True Religion operates some 140 stores in 33 states and markets and also sells its products in some 500 department store and specialty store locations in North America and South America. Sales have fallen in recent years amid competition from online and lower-cost brands. The company has also been hurt by the rise of athleisure wear.

“After a careful review, we are taking an important step to reduce our debt, reinvigorate True Religion’s iconic brand and position the company for future growth and success,” said John Ermatinger, president and CEO of True Religion. “By dramatically improving our capital structure 24 months in advance of our term loan maturity, we will continue business operations as usual and provide our employees and business partners the long-term stability they need, while providing the necessary flexibility to invest in growing our digital footprint, building connections with customers, and improving organizational competencies."

True Religion said its restructuring plan provides for full payment of claims of the company's continuing trade creditors, which includes continuing vendors, suppliers and landlords. The company has filed a motion to honor and pay prepetition purchase orders that were issued prior to the petition date, but which have not yet come due. True Religion has also filed a separate motion to pay certain vendor claims that arose prior to the petition date, as well as to pay for goods received within 20 days of the bankruptcy filing.

True Religion has secured post-petition debtor-in-possession (DIP) financing from Citizens Bank N.A. for up to $60 million.

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