Liberty Interactive Corp., owner of QVC, will acquire the remaining 62% in HSN that it didn’t already own.

Liberty Interactive Corp., parent company of online retailer and TV-shopping giant QVC Group, announced today it will acquire HSN Inc., another online retailer and TV shopping network, for stock valued at $2.1 billion.

The total value of the deal, including cash and short- and long-term investments, is $2.6 billion. Liberty Interactive currently owns 38.2% of HSNi and with this deal will acquire the remaining 61.8%. HSN Inc. includes the online and TV retailer HSN, and the Cornerstone brands portfolio, which includes home furnishings retailers Garnet Hill, Frontgate, Ballard Designs, Improvements and Grandin Road.

For QVC, the acquisition will increase its scale, boost its online and mobile sales, bolster its development of “over the top” technology that reaches consumers who don’t have cable TV plans, and provide “meaningful synergies through cost reduction and revenue growth opportunities,” Liberty Interactive says.

“The addition of HSN will enhance QVC’s position as the leading global video e-commerce retailer,” said Greg Maffei, Liberty Interactive president and CEO in the acquisition announcement. “Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms.”

HSN and QVC networks will continue to operate separately and maintain distinct brands, according to Liberty Interactive Corp. Combined, there will be five U.S. networks including QVC, QVC2, BeautyiQ, HSN and HSN2.

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Because both companies are so similar already, the acquisition makes sense, says Ken Cassar, principal analyst at Slice Intelligence. The retailers have similar businesses models, merchandise and likely customer demographics, he says.

“This acquisition was just a completion of what had already been started,” Cassar says.

While slimming down its TV networks would reduce costs, the merger allows QVC and HSN to differentiate the TV networks more than than they could when they competed directly, Cassar says.

QVC Group ranks No. 7 in the Internet Retailer 2017 Top 1000 and generated $5.594 billion in online sales in 2016. HSN is No. 28 with $1.896 billion in 2016 online sales, according to Top500Guide.com. E-commerce sales are roughly half of the retailers’ total annual sales, according to their respective earnings reports.

Online sales, however, have grown slowly in the past few years for both merchants. From 2015 to 2016, QVC Group’s online sales grew 7.33% and HSN Inc.’s online sales decreased 1.2% year over year, compared with the average year-over-year growth rate for the Top 500 retailers at 23.31%, according to Top500Guide.com. QVC’s five-year compound annual growth rate is -2.73%, while HSN’s is 7.20%, according to Top500Guide.com.

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Slow online sales could also be attributed to a waning TV shopping audience, Cassar says.

“Cord cutting has to be a significant impediment to the TV shopping business,” he says, referring to the trend of consumers relying on internet services to watch television instead of cable or satellite connections. “While e-commerce may account for 50% of sales, my guess is that in a lot of cases online sale are driven by exposure to the product on television.”

Both retailers, however,  have made an effort to distribute their video content in other ways besides TV. For example, HSN has hosted more than 70 Facebook Live events in which the retailer broadcasts a live video to its followers on the social media network.

The deal is expected to close in the fourth quarter of 2017. HSN’s headquarters will remain in St. Petersburg, Fla., and QVC’s CEO Mike George will also take charge of HSN. In April of this year, HSN CEO Mindy Grossman resigned to become president and CEO at Weight Watchers International Inc. and the retailer has not replaced her.

The sale price for HSN is smaller than what Liberty Interactive Group paid when it acquired fast-growing flash-sale retailer of women’s and children’s products zulily Inc. in 2015 for $2.4 billion. In 2016, Zulily Group generated $1.55 billion in revenue.

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