What happened
CommerceHub, a cloud-based e-commerce marketing solutions provider, is acquiring ChannelAdvisor (ECOM) for $23.10 per share. The offer represents a 57% premium to ChannelAdvisor's closing price on Friday.
As of 10:40 a.m. ET on Tuesday, shares of ChannelAdvisor were up 55% to $22.79. The stock had been down substantially year to date before the announcement, but the proposed acquisition gives shareholders a nice exit point.
So what
This deal, which is expected to close this year, appears to be a perfect fit, combining two leading e-commerce solutions providers. ChannelAdvisor has delivered steady double-digit percentage growth in recent years as brands and retailers have adopted its software-as-a-service platform to better manage their merchandise sales across major online retail channels such as Amazon, Shopify, and Walmart.
The combined company will allow retailers to access even more brands reaching more than 18,000 customers, representing more than $50 billion in gross merchandise volume and over $500 million in digital marketing and retail advertising spending. Management is also touting that its clients will see cost savings on delivery by using CommerceHub's Delivery Suite.
Now what
CommerceHub is privately held, so once it acquires ChannelAdvisor, shareholders won't have a way to benefit from any future growth of the company. Still, investors should look at this deal for what it says about the future of e-commerce growth. It could be a signal that top online retail stocks are undervalued and ripe for the picking right now. More companies are investing in digital services to meet customers where they are shopping. E-commerce has more than doubled as a percentage of total retail sales over the last 10 years, and it's likely not done expanding.
