Tag: e-commerce

Demandware to test demand in public market?

Brenon Daly

Contact: Brenon Daly

After a pair of billion-dollar deals over the past half-year removed two old-line e-commerce vendors from the Nasdaq, an on-demand startup is rumored to be looking to replenish the ranks on the public market. Several sources have indicated that Demandware has picked underwriters and is set to file its IPO paperwork shortly, with Goldman Sachs & Co and Deutsche Bank Securities running the books. The filing, if it comes, would continue a trend of offerings by relatively small subscription-based companies. Demandware is expected to do about $40m in revenue in 2011.

Founded in 2004 and based near Boston, the company provides an e-commerce platform for more than 150 customers, including Barneys New York and The Jones Group. Demandware’s investors include local VC firms General Catalyst Partners and North Bridge Venture Partners.

The IPO for Demandware would come at a time of consolidation in the e-commerce industry, with big buyers paying big prices. Late last year, Oracle acquired Art Technology Group for $1bn, paying the highest price that ATG shares had seen since 2001. (ATG, which was founded in 1991, counted more than 1,000 customers.) And then earlier this year, eBay handed over $2.4bn for GSI Commerce. That stands as the largest Internet transaction since February 2008.

Oracle goes shopping in e-commerce

Brenon Daly

Contact: Brenon Daly

Oracle says it will pay $1bn in cash for Art Technology Group, the second public company the consolidator is set to erase from the Nasdaq so far this year. Terms call for Oracle to shell out $6 for each of the roughly 165 million shares outstanding for ATG. That represents a 46% premium over ATG’s closing price in the previous session and the highest price for the stock since 2001, and almost twice the level it was trading at in August. (ATG also got roughed up on the market in February, when it did a secondary offering.)

Although investors weren’t thrilled with the dilution, the secondary did essentially double the company’s cash on hand. Backing out that amount gives the proposed transaction an enterprise value of $850m. That’s 4.25 times ATG’s projected 2010 sales of $200m – a fairly rich multiple for a company that was growing at 11-12%. We suspect that the premium came because Oracle had to top another bidder. In our minds, the most likely other suitor would be Autonomy Corp. Morgan Stanley advised ATG on the deal, which is expected to close early next year.