Learn2.com Inc. needs a cash infusion, and E-Stamp Corp. needs an exit strategy for an unprofitable business. In an attempt to meet those needs, the two e-commerce companies today announced plans to merge later this year and focus on the online learning market.

Mountain View, Calif.-based E-Stamp, which previously sold postage stamps online, runs a shipping and logistics service. Learn2.com is an online distance-learning company for corporate, government and individual clients.

Learn2.com will get cash to pay off its debts. White Plains, N.Y.-based Learn2.com reported losses of almost $38 million last quarter, according to its filing with the Securities and Exchange Commission (SEC).

The new company will focus on the corporate Web-based learning market, according to a joint statement.

"Upon the completion of the merger, E-Stamp shareholders will own approximately 50.1% of the new company and the current Learn2.com shareholders will own the remaining approximately 49.9%," the statement said.

"The merger with E-Stamp will allow us to increase our market presence by investing in additional sales professionals and accelerating our product development initiatives," said Learn2.com CEO Stephen P. Gott.

"After evaluating a number of strategic options, E-Stamp has chosen to merge with Learn2.com to serve the best interests of E-Stamp shareholders," said E-Stamp president and CEO Robert "Bo" Ewald.

Last year, E-Stamp reported a net loss of $55.4 million. The company said it had about $29 million in cash assets as of Dec. 31, according to its SEC filings. E-Stamp expects to announce its first-quarter results next week. Learn2.com will release its earnings statement Thursday and is expected to show a profit.

"We expect that at the time of the closing of the merger that Learn2.com will have access to $15 million to $17.5 million in working capital and will be debt-free," said Ed Malysz, E-Stamp vice president, general counsel and acting chief financial officer.

The companies expect to close the merger by the end of September, at which point E-Stamp will be a "virtual company" that exists only on paper, said Bob Giordano, a spokesman for Learn2.com.

Malysz confirmed this, saying all of E-Stamp's approximately 30 employees, except Ewald, will either be laid off or transferred to a third-party business as part of negotiations to sell the shipping and logistics portion of the company.

Gott and Ewald will become CEO and chairman, respectively, of the newly formed company, which will be called Learn2 Corp.

According to the statement, White Plains, N.Y.-based Learn2.com is running a profitable business, which the company expects to grow within the next few years with the help of cash from E-Stamp.

As a good-faith first step toward the merger, E-Stamp will advance Learn2.com $2 million.

In November, E-Stamp announced that it would phase out its online stamp-buying service and lay off approximately 30% of its 120 employees.

At the time, E-Stamp said it would concentrate on shipping and logistics."The company was seeking to be cautious in our cash management," Malysz said. That, however, hasn't proved profitable either. By thee end of the year, Malysz said, the company had earned only $350,000.

» posted by ITworld staff

Computerworld

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