E-tailer Buy.com Files for IPO to Raise $86.25 Million
Buy.com registered with the SEC for an initial public offering (IPO) of up to $86.25 million in common stock. But the e-tailer -- one of Amazon.com’s largest rivals -- said the number of shares it will offer and the price range for each share sold hadn’t been determined.
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Buy.com said the shares will be sold by the company, but any shares sold pursuant to the exercise of an over- allotment option -- if any -- will be sold by its principal stockholder. RBC Capital Markets, Thomas Weisel Partners and Pacific Crest Securities are acting as managing underwriters. The company plans to list its stock on the Nasdaq National Market under the symbol “BUYY.”
Buy.com -- which like Amazon sells CE, books and various other product categories -- said in an SEC filing that some of the proceeds from the IPO will be used to repay its outstanding debt to ThinkTank Holdings, a company owned by Buy.com CEO Scott Blum. The company said other proceeds will be “reserved and restricted from use to serve as guarantees for our obligations to certain of our distributors and our credit card processor.” Prior to the IPO, Blum was the largest Buy.com shareholder.
The company said some of the proceeds will be used for “capital expenditures associated with technology and systems upgrades and expansion,” as well as “sales and marketing activities, particularly advertising campaigns and promotions, to increase” the company’s “brand recognition.” The company said “the remainder… will be used for working capital and for general corporate purposes.” But Buy.com said it “may also use an unspecified” amount “to acquire or invest in complementary businesses, services or technologies, or to enter into strategic marketing relationships with 3rd parties.”
Buy.com also said in the filing that its sales increased to $290.8 million in 2004 from $238.2 million a year ago, while its loss narrowed to $15.4 million from $25.6 million. It said “more than 7 million unique customers” had made a purchase from it since the company started in 1997, and within the past 12 months more than 1.4 million unique customers had bought one or more products from it. More than 50% of its annual sales come from repeat customers, it said. The company also said it had 121 full-time employees as of Dec. 31.
The e-tailer’s largest distributor is Ingram Micro, which it said “fulfilled more than 66% of our orders” based on revenue in 2004. A deal the companies signed requires Buy.com to use Ingram as the primary distributor for various computer products including hardware and software. Buy.com said the deal expires in Aug. but renews automatically each year for one year unless either company provides at least 120 days prior written notice to the other. It said no other distributor now fulfills more than 10% of its orders.