Operator of 'Private' Web Sales Is Acquired

The idea of holding private sales of premium merchandise on the Web suddenly seems to be in vogue. GSI Commerce, which manages the Web sites for major retailers like Toys "R" Us and Zales, announced on Tuesday that it was buying Retail Convergence, operator of the Web site Rue La La, in a deal valued at as much as $350 million. Sites like Rue La La, and its major American rival, Gilt.com, take the exclusivity of designer sample sales onto the Web. Only current members can invite new participants. Every day there may be new items to buy. For example, a Rue La La member might log on to find 50 percent off items like Prada bags or Marc Jacobs shoes in a two-day sale. Retail Convergence also operates Smartbargains.com, a site aimed at selling excess inventory of major brands. Since it started operations at the beginning of last year, Rue La La has signed up 1.2 million members. It produced revenue of $28 million in the third quarter of this year, up from $5.8 million in the same quarter a year ago. GSI's purchase includes a $180 million payment at the closing of the deal, half in cash and half in stock. Rue La La's shareholders would earn an additional $170 million if the company's revenue reached certain goals.