Does this make any sense to anyone?
"ASHFORD.COM MAKES CRAFTY DEAL FOR GUILD.COM
Ashford.com (ASFD $15/32), an online retailer of luxury goods,
has agreed to acquire Guild.com for 8.7 million shares, worth
approximately $3.5 million. In our view, the threat of extinction
for Guild created an interesting consolidation opportunity for
Ashford, even with its severely depressed stock price.
Specifically, we believe Guild.com complements Ashford's platform
and customer base with its original art and handmade crafts.
Additionally, Guild brings $11.5 million of cash, a high-margin
fee-based business, no inventory and no debt, and therefore
should provide Ashford with additional liquidity while
contributing to its path to profitability. While we applaud the
favorable terms of this acquisition, we remain concerned with the
bigger issue of whether Ashford can establish a luxury brand with
dramatically reduced marketing investments. However, while
Ashford may be challenged to meet our aggressive fiscal Q3
expectations of $33 million in revenue and EPS ($0.23), we do not
expect it to need to raise capital in the near term (especially
with the cash this deal brings). This certainly gives Ashford
more flexibility than many of the companies in this space, in our
view."
Why would any firm provide $11.5 million in cash for $3.5 million in stock? Guild.com could have spent $3.5 million and owned 8.7 million shares of ASFD.
Would anyone like to make a deal like that with me? |
