Data Dive

Data Dive, New Starts Edition: Overstock, Sears And iZettle’s Next Steps

Data Dive: Overstock, Sears, PayPal and iZettle

As of today, there are 28 days left in the year (and 22 shopping days left till Christmas), meaning themes of “out with the old and in with the next” have been rather prevalent, and predictions for what’s coming up next in 2019 have become common editorial fodder.

But some firms have decided to get an early start on their next step – saving the world a lot of speculation, as they’ve decided the time is now to move on to those next chapters.

Though, admittedly, some of those roads forward are straighter and more cleared than others.

So who is hitting the reset button this week – or at least valiantly trying to?

Overstock Officially Saying Goodbye to Retail

Though the outcome has been long speculated and hinted at, Overstock made it official this week, announcing it will be selling off its retail business in the next few months as it gears up to focus full-time on its blockchain initiatives.

Overstock Chief Executive Patrick Byrne commented to media outlets that a sale could happen as early as February of 2019. The company had hinted in the past at its intention to sell off its eCommerce mainline in favor of focusing on blockchain tech. Byrne has not disclosed who or what entity would be purchasing the Overstock retail arm, though news of the potential sale did bounce the firm’s stock price up 26 percent.

Despite the bounce, however, on the year, Overstock’s share price is down 65 percent since the start of 2018.

Overstock’s most recent focus has been on Medici, the blockchain company in which it has invested $175 million over the years. The unit so far is a cash incinerator, losing around $39 million in the first three quarters of this year. That compares to $22 million in 2017.

The losses, thus far, do not concern Byrne.

“I don’t care whether tZERO is losing $2 million a month,” Byrne told The Wall Street Journal. “We think we’ve got cold fusion on the blockchain side.”

Medici acts a home for startups – and not only cryptocurrencies. Voatz, for one example, developed a voting system via smartphone app that runs on blockchain, while another, out of Rwanda, is using blockchain to handle digital property rights, noted the report.

“We believe [tZERO] is leading the pack globally in possibly the most lucrative of all blockchain applications (i.e., security tokens). I think the public may not understand our master plan in Medici, how the pieces all fit together, as well as how blockchain firms in this network are making similarly dramatic progress in their respective fields,” Byrne said in a recent letter to investors.

We shall see if, with the pressure of running an eCommerce firm removed, the public will get a clearer vision of the master plan – and the cold fusion – at work.

A New (Old) Buyer for Sears

Never underestimate the potential of a holiday season miracle.

It seems Sears may be getting yet another shot at life, if recent reports are accurate that the hedge fund Cyrus Capital Partners, which is run by Sears Chairman and former CEO Eddie Lampert, is preparing a potential joint takeover bid that would keep the bankrupt chain an ongoing concern.

Reports indicated that the buyers could offer to swap out debt they currently hold for ownership of the stores as part of a credit bid.

Earlier reports indicated the chain was in the process of putting the finishing touches on a deal for $350 million in financing with Great American Capital Partners, along with other lenders. That deal would bring the retailers’ financing package up to $650 million, with $300 million in loans pledged by bank lenders, Reuters reported.

In October, Sears Holdings filed for Chapter 11 bankruptcy and prepared to shutter just under 150 stores. As part of the filing, Sears listed $6.9 billion in assets and $11.3 billion in liabilities.

Lampert, during his tenure as CEO, had vowed to bring Sears back to its glory days as a leading U.S. retailer, but his efforts failed to resonate with consumers and the firm had failed to turn a profit since 2011.

A bankruptcy court would have to approve the rumored purchase attempt by Lampert and company, as well as competing bids from other potential buyers – including ones that would liquidate the company.

iZettle and PayPal’s Merger Hiccup

PayPal and iZettle may be ready to begin their new lives as a merged entity, but the U.K. antitrust watchdog seems to have some question about that plan, according to The Wall Street Journal.

PayPal announced it was buying the FinTech company for $2.2 billion in cash in May of this year. The antitrust watchdog, which combines the two largest suppliers of mobile POS devices in the U.K., may be in violation of U.S. antitrust laws.

The deal is now being scrutinized by the country’s Competition and Markets Authority (CMA).

“After completing its phase one investigation, the CMA has found that PayPal could face insufficient competition in the U.K. after acquiring its market-leading rival. The finding raises concerns that the merger could result in customers – which include small and medium-sized businesses [SMBs] – paying higher prices or receiving a lower-quality service,” the agency said in a press release.

The CMA noted its investigation found that iZettle could have been a strong competitor for PayPal in the U.K., something the public could have potentially benefitted from in terms of “driving future innovation and lower prices.”

As a result, PayPal might be forced to stop the part of the transaction that focuses on the companies’ businesses in the U.K., unless it addresses those concerns.

“We are now working to address the CMA’s concerns and demonstrate that the market will remain competitive so we can move forward with integrating iZettle into our global platform,” a PayPal spokesperson said.

If both companies are not able to address the agency’s concerns, the deal will be moved to an in-depth phase two investigation, which will be carried out by a group of independent CMA panel members.

So what did we learn this week? New journeys can begin at any time – and get interrupted – at any time.

As to how those journey will turn out? We’ll keep you current as they unfold.

Have a happy Monday.

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