Softbank's stake in 1-800-Flowers upcoming IPO:
interactive.wsj.com
May 24, 1999
Tech Center
Ftd.com, 1-800-Flowers Battle
For Online Sales, Plan IPOs
By GEORGE ANDERS
Staff Reporter of THE WALL STREET JOURNAL
In one of the Internet's more unusual battles for market supremacy,
1-800-Flowers Inc. and ftd.com Inc. are seeking to go public, just a few days
after attracting high-profile cash infusions from venture capitalists and computer
tycoon Michael Dell, respectively.
Both companies sell flowers online and through traditional telephone channels.
In registration documents, both say they see big opportunities to expand into
the gift business, using the Internet as their fastest-growing sales channel.
Together, the companies want to raise more than $200 million from their initial
public offerings, hefty amounts for Internet-related businesses.
Comparing the Results
Of the two companies, 1-800-Flowers has the bigger existing business and the
more ambitious financing strategy. In its IPO filing, the Westbury, N.Y.,
company said it had $203.7 million of revenue for the nine months ended
March 28. By contrast, ftd.com, of Downers Grove, Ill., had revenue of $31.2
million for the nine months ended March 31. Both companies had modest net
losses.
Currently, 1-800-Flowers said, 72% of its
revenue comes from phone orders and just 15%
from the Internet. But the share of online orders
has climbed steadily in the past two years, and
1-800-Flowers said its objective "is to be the leading electronic-commerce
provider of flowers, gifts and products for the home and garden."
To help pay for an aggressive online marketing campaign, 1-800-Flowers
earlier this month lined up more than $140 million of financing from Benchmark
Capital, Softbank Corp. of Japan and LVMH Moet Hennessey Louis
Vuitton SA of France.
Of that amount, $77 million came from Benchmark, a Menlo Park, Calif.,
venture-capital firm best known for bankrolling online-auction concern eBay
Inc. That marks one of Benchmark's biggest venture investments ever.
Benchmark partner David Beirne will join the board of the flower merchant. A
further $40 million came from Softbank, which is a major backer of Web portal
Yahoo! Inc. Some $25 million came from LVMH, a luxury-goods maker
active in Internet investments.
Already, 1-800-Flowers spends millions of dollars promoting its Internet
business on America Online Inc. and Microsoft Corp.'s MSN Network.
People familiar with the company said it is likely that, with the Softbank
investment, 1-800-Flowers also will become a high-profile advertiser on
Yahoo's services. In its IPO filing, 1-800-Flowers said it is seeking to raise as
much as $150 million.
Payday for Controlling Family
If 1-800-Flowers carries out a successful IPO, the biggest winners will be the
McCann family of New York, which owns more than 60% of the company.
James McCann, 47 years old, is chairman and chief executive officer of the
company. His younger brother, Christopher, 38, is senior vice president.
Meanwhile, ftd.com said that MSD Capital LP bought a stake in the company
earlier this month. MSD is the private investment arm of Mr. Dell, the founder
and CEO of Dell Computer Corp. Neither party disclosed how much Mr.
Dell paid or what size stake he acquired.
Until that investment, ftd.com had been wholly owned by FTD Corp., the
successor company to a florists' co-operative that was founded in 1910. In its
IPO filing, ftd.com said it is seeking to raise as much as $90 million from its
stock offering. It added that 49% of its orders come from the Internet; the rest
come chiefly by phone.
The 1-800-Flowers offering is being underwritten by Goldman, Sachs & Co.
The ftd.com offering is being managed by Bear, Stearns & Co.
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