Company Also Engages Raymond James to Explore Strategic Alternatives for its PFS Business

PFSweb, Inc. (NASDAQ: PFSW), a global commerce services company, has agreed to sell LiveArea, its global customer experience and commerce agency business unit to Merkle, Inc., a leading technology-enabled, data-driven customer experience management (CXM) company within Dentsu Group’s international business, Dentsu International (Tokyo: 4324).

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Under the terms of the agreement, Merkle will purchase LiveArea for total consideration of approximately $250 million, with net proceeds expected to range between $185 million to $200 million, after consideration of estimated taxes and transaction related expenses. Following the closing of the transaction, PFSweb expects to use a portion of the net proceeds, along with existing cash on hand, to pay down in full its senior financing facilities. For the trailing twelve months ended March 31, 2021, LiveArea generated approximately $85 million in revenue on a standalone basis. The transaction is expected to close in the third quarter of 2021, subject to customary closing conditions.

Throughout its 30-year history, Merkle has worked with world-class brands to implement customer-centric performance marketing solutions, providing tailored, unique customer experiences on a global scale. Its heritage in data, technology, and analytics forms the foundation for its understanding of consumer insights that drive hyper-personalized marketing strategies. As a Dentsu Group company, Merkle is committed to helping clients deliver best-in-class, differentiated and connected commerce experiences across the entire customer journey. In addition to LiveArea’s expertise in technology and Connected Commerce, the agency’s growing range of digital business capabilities, which has expanded to include NXT™ Intelligence, Product Innovation, Service Design, Performance Marketing, and Orchestrated Services, complements Merkle’s services and strategy.

“Over the past year and a half, we have worked diligently to return LiveArea to sustained growth, with our strengthened leadership and sales teams driving greater organizational efficiency and record sales pipeline activity,” said Mike Willoughby, CEO of PFSweb. “We believe this transaction with Merkle, a fellow high-touch, technology-enabled customer experience management company, will allow LiveArea to more fully realize its growth potential, create significant value for our LiveArea strategic partners and position LiveArea to better serve our world-class clients. The Merkle team not only recognizes our improved foundation, but also shares our dedication to innovative, data-driven solutions and exceptional client service. Under Merkle’s ownership, we believe LiveArea is well-positioned for the road ahead.”

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Jim Butler, President of LiveArea, added: “I am grateful for our team’s hard work and the growing pipeline of bookings and new service offerings we have built. We believe our integration into Merkle will provide our team with additional support and accelerated development opportunities, and we look forward to working with the Merkle team to make LiveArea an even stronger company to create agile, business driving solutions with our clients. I am also excited to continue working with my colleagues at PFS to support our shared clients as we further strengthen our service offering with access to Merkle’s digital business capabilities.”

“Adding LiveArea to the Merkle family gives us the opportunity to both increase our U.S. commerce presence and deepen our expertise in EMEA at a time of accelerated growth across our industry,” said Michael Komasinski, President of Merkle Americas. “LiveArea’s seasoned team and breadth of commerce capabilities strengthen our competitive advantage in the delivery of scaled, efficient customer experience management services and integrated solutions.”

Raymond James acted as exclusive financial advisor to PFSweb in the transaction. FisherBroyles, LLP acted as legal counsel to PFSweb in the transaction.

Exploration of Strategic Alternatives
With the divestiture of LiveArea underway, PFSweb has also engaged Raymond James to lead the exploration of a full range of strategic alternatives for its remaining business segment, PFS, to maximize shareholder value.

“Through the first quarter of 2021, PFSweb’s strong performance has demonstrated the benefits of our focus on optimizing resources and serving as a committed, flexible partner for our clients,” said Monica Luechtefeld, chair of PFSweb’s board of directors. “Over the past three years, we have worked to establish LiveArea and PFS as distinct brands in the market, segment these businesses financially, and undergo an organizational restructuring that aligned our back-office functions with this segmented approach. This transaction clearly validates our efforts to maximize growth for each business unit and drive value for our shareholders, and we will continue to focus on maximizing the growth of PFS while we complete this strategic alternatives process. As this process unfolds, our assessment will prioritize the option that most expeditiously and efficiently maximizes value for our shareholders while also seeking the best outcome for our team members.”

PFSweb has not established a timeline for completion of this strategic review process, and the company does not intend to comment further regarding the review process unless or until a specific transaction is approved by its board of directors or shareholders, the review process is concluded, or it has otherwise determined that further disclosure is appropriate or required by law. The company provides no assurance that the strategic review process will result in any transaction.

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