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Sitestar Aims Higher With Plan to Buy MotherNature

E-commerce: The investment firm says it has an $11.4-million deal for the popular health Web site.

August 25, 2000|KAREN ROBINSON-JACOBS | TIMES STAFF WRITER

Sitestar Corp., a small Encino-based Internet investment company that gobbled up four companies in a two-month period last year, has set its sights on a much larger target, MotherNature.com, one of the most popular health and family Web sites.

Sitestar's president, Clinton J. Sallee, said the company plans to offer 75 cents per share for Concord, Mass.-based MotherNature.com, which sells dietary supplements and offers advice on healthy living. Sitestar plans to finance the deal, which would be valued at $11.4 million, with a capital commitment from New York-based NIR Capital Group.

The offer represents a premium of 50% over Thursday's closing price of 50 cents, up 3 cents on Nasdaq. The company had sales in 1999 of $5.8 million and has a market capitalization of $7.6 million.

Michael I. Barach, president and chief executive of MotherNature.com., plans to discuss the matter with the company's board today, according to Sallee.

MotherNature.com Chief Financial Officer Michael Bayer declined to comment "on rumors" about a possible takeover of the company, which is heavily backed by CMGI Inc., one of the best-known Internet-company incubators.

But Bayer acknowledged that the precipitous slide of MotherNature.com's share price--it went public in December with an initial offering price of $13--might have made the company a takeover target.

However, he added, "I don't think there's been an undue concern about being a target."

Despite the slumping stock and the online retailer's net loss of $25.3 million for the first six months of this year, Sallee said he and his investors see MotherNature.com as a bargain; the company has more than $27 million cash on hand.

"We're attracted more to their balance sheet than to the notion of selling vitamins online," said Sallee, whose company had revenue of $224,000 last year. "This is a financial play more than a strategy play."

In just over a year, Sitestar has transformed itself from a wholesaler and retailer of burritos and other Mexican foods, called Interfoods Consolidated Inc., with about $10 million in annual sales, to a would-be Internet player.

The metamorphosis began with the purchase of privately held Sitestar, an Internet service provider in Annapolis, Md. Since last summer, the company also has acquired online power tool retailer Great Tools Direct (http://www.greattools.com), Soccersite.com and several other Internet sites.

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