What does CommerceHub get and become with this acquisition?
- A huge stable of marketplace integrations and large brand customers integrated with marketplaces – much more modern than its own which was the result of a 2015 Mercent acquisition.
- A sizeable international presence, something that the Albany-based CommerceHub never seemed to master. (they don’t call it “small-bany” for nothing)
- Significantly, they get to stop competing with each other. ChannelAdvisor had built a nascent 1P dropship offering, and CommerceHub continued to try and sell against ChannelAdvisor, with relatively limited success. That can all stop – with a singular & integrated synergy.
Well, it seems to me there have been near constant rumors about ChannelAdvisor being up for sale in the past 5 years or so, looking for the right buyer and the right price. The 57% premium on the current share price for ChannelAdvisor by a strategic competitor was likely too high to pass up, especially in this market. Put another way, ChannelAdvisor was acquired for its peak pandemic price.
What's the market saying?
There have been no fewer than 5 acquisitions or investments in marketplace management-type companies in the Amazon/eBay/Walmart space. This is continuing that type of consolidation. The capability is important, but the margins are not high to run this kind of software company.
The reason is that you are the “glue”. And there is ultimately not a lot of money in the glue. The money in this corner of the market is really in the ads business, something ChannelAdvisor participated in but was not the market leader.
More to come We're sure!