IAC/InterActiveCorp, whose properties include HSN and the Cornerstone Brands catalogs, will spin itself off into five separate publicly traded companies. HSN and the Cornerstone books such as Ballard Designs, Frontgate, Garnet Hill, Grandin Road, Isabella Bird, Smith + Noble, The Territory Ahead, and TravelSmith, fall into a business that will be called IAC Retailing Now.
The group, which had been known as IAC’s Retailing segment, will continue to be run by Mindy Grossman and will retain its St. Petersburg, FL-based headquarters. IAC two years ago bought Cornerstone Brands for $760 million. HSN Catalog Services, which consists of the Improvements and Alsto’s home products catalogs, became part of Cornerstone Brands.
IAC chairman/CEO Barry Diller said in a conference call Monday that the company wants to concentrate on its pure Internet units. One of those, online footwear retailer Shoebuy.com, will remain a part of the existing IAC, along with companies like Match.com, Ask.com, and Citysearch.
Diller said there is no prospective buyer for HSN, which represents the bulk of that group’s total sales. “There’s always a possibility that they will be sold, and they can do whatever they want after they are spun off,” Diller said. “There are no immediate plans at the moment.”
Stuart Rose, managing director of Wellesley, MA-based investment bank Tully & Holland, says the move makes sense because it has been hard to properly value IAC because of its complex structure and varied businesses.
“This move will allow each of the businesses to be more transparent and, therefore, more properly valued,” Rose says. “A company like HSN/Cornerstone may have been thought of as a poor performer when compared to Ticketmaster, but probably has very good dynamics when compared to other direct marketing businesses.” Once those numbers become more apparent, he says, “HSN/Cornerstone’s value will properly reflect its performance.”
And Lee Helman, managing director with New York-based investment bank Financo, thinks the move by IAC is a sign that HSN is not for sale, though IAC may receive some offers. “HSN represents roughly 75%-80% of the retail revenue, so I would find it hard to believe that HSN will be sold now and Cornerstone would be left behind,” Helman says.
What’s more, Helman says, “the fact that the investments made in the business more recently haven’t yet flowed through to the bottom line, make me question whether a sale now would occur. It is always possible when a company is in registration to go public that it receives offers, and that may be the case here as this is waiting to be spun off.”