Embattled Outpost.com owner agrees to takeover deal

Struggling online technology retailer Cyberian Outpost Inc. today announced that it has agreed to be acquired by PC Connection Inc., a reseller that markets PCs and other products through catalogs, call centers and several Web sites.

The two companies said they signed a stock-swap deal with a value that will be based on Cyberian Outpost's revenue during the next three months and the average closing price of PC Connection's common stock during a 10-day period prior to the official completion of the acquisition. That's expected to occur in September, they added.

As part of the agreement, Merrimack, N.H.-based PC Connection also will immediately provide Cyberian Outpost with a working capital credit line of up to $3 million and an inventory credit line of up to $5 million. The lines of credit will be secured by all the assets of Cyberian Outpost, which operates an online retailing Web site under the name Outpost.com.

The acquisition deal follows a mid-April layoff of 110 employees that slashed Cyberian Outpost's workforce by 30%. The Kent, Conn.-based company also tapped Darryl Peck, its founder and chairman, to take over as president and CEO at that time (see story).

In addition, Cyberian Outpost said last month that it was dropping a business-to-business technology reselling operation and focusing solely on sales to home users. The reorganization moves came just four days after the retailer disclosed that it was having trouble finding new financing needed to pay its creditors and fund continued operations (see story).

If the acquisition goes through as planned, Cyberian Outpost will continue to operate under its own name, with Peck staying on to head the unit, according to the two companies. Cyberian Outpost, a pioneering online retailer that was founded in 1995, had revenue of $355 million in its fiscal year ended Feb. 28; PC Connection did $1.45 billion worth of business during 2000.

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