Shares of PFSweb, Inc. (PFSW) soared 42.7% to close at $10.80 on July 6 after the company announced the sale of LiveArea, its international customer experience and commerce agency business unit, to Merkel Inc. for $250 million.
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PFSweb, Inc. is a global E-commerce company that oversees and enhances the online customer shopping experience for major manufacturers and retailers through two key business units – LiveArea for professional services and PFS for order fulfillment services.
Merkle, Inc. is a technology-enabled, data-driven customer experience management (CXM) company.
Per the terms of the deal, Merkle will pay $250 million, which implies net proceeds of between $185 million and $200 million, net of expenses.
Upon completion, the company will utilize the net proceeds and available cash to fully repay its senior debt.
Notably, LiveArea recorded $85 million in revenue on a standalone basis for the full year ending March 31, 2021.
LiveArea will enhance Merkle’s capabilities and commercial presence in the U.S. as well as the EMEA region. (See PFSweb stock chart on TipRanks)
Furthermore, the company has recruited Raymond James to explore possible strategic alternatives for its remaining business unit, PFS, to return maximum value to its shareholders.
PFSweb refrained from giving out any timeline for its strategic review process. Moreover, the company did not provide any assurances that the review will lead to any transaction in the future.
Both LiveArea and PFS have been established as distinct brands over the past 3 years. They have been segmented financially as a part of the company’s restructuring plans.
The deal is expected to close during the third quarter of 2021, subject to mandatory regulatory approvals.
PFSweb’s CEO Mike Willoughby commented, “We believe this transaction with Merkle, a fellow high-touch, technology-enabled customer experience management company, will allow LiveArea to more fully realize its growth potential, create significant value for our LiveArea strategic partners and position LiveArea to better serve our world-class clients.”
Following the LiveArea sale announcement, Lake Street analyst Mark Argento increased the price target on PFSweb from $9 to $13 (20.4% upside potential) and maintained a Buy rating.
Argento expects the strategic alternatives process for the remaining business unit, PFS, to lead to the sale of the segment.
Consensus among analysts is a Moderate Buy based on 2 unanimous Buys. The average PFSweb price target of $10.50 implies 2.8% downside potential to current levels.
TipRanks data shows that financial blogger opinions are 66% Bullish on PSFW, compared to a sector average of 69%.
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