VerticalNet agreed in November 1999 to buy NECX Exchange for $10 million in cash and about $95 million in VerticalNet stock. The deal aimed to pair VerticalNet’s business-to-business online communities with NECX’s electronics exchange and distribution operation, creating a marketplace where engineers and purchasing professionals could find and trade components. VerticalNet later sold NECX to eHitex, which renamed itself Converge, in a transaction announced in December 2000.
What was the VerticalNet–NECX deal?
EE Times reported on November 16, 1999, that NECX had agreed to be acquired for $10 million in cash plus approximately $95 million in VerticalNet stock. The companies expected the transaction to close by the end of 1999. That consideration put the announced deal at roughly $105 million, combining cash with shares rather than an all-cash payment. EE Times
Why did VerticalNet buy NECX?
VerticalNet’s model centered on online communities organized around particular industries. It wanted to add a working marketplace to that model: NECX brought electronics-market expertise and the ability to support sourcing, brokerage, distribution, and transactions, not just online information or leads. VerticalNet said the combination would create a trading community for engineers and component buyers and extend its community approach into advanced technology and communications. EE Times
The two companies addressed related but distinct needs:
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| Dimension | VerticalNet | NECX |
|---|---|---|
| Audience | Members of industry-specific business communities | Electronics engineers and procurement professionals |
| Core function | Industry content, community, and online lead generation | Component sourcing, brokerage, logistics, and exchange operations |
| Scale cited at the time | A portfolio of online communities; no comparable revenue figure is stated in the cited announcements. | $350 million in gross revenue and $37 million in gross profit in 1998, according to NECX; VerticalNet also cited 18,000 global trading partners and access to more than three million products in 1999. |
| Revenue logic | Community and software-platform economics | Transaction and distribution economics |
The scale figures describe different measures and periods: NECX’s revenue and profit are for 1998, while the partner and product figures were in VerticalNet’s 1999 description. They illustrate why NECX could add operating capability and an established trading base to VerticalNet’s communities. NECX background VerticalNet announcement
What did NECX contribute?
NECX was an operating electronics business as well as an online marketplace. It had been building an exchange for semiconductors, computer systems, and subassemblies. Earlier in 1999, NECX and Sumitomo Corp. launched the NECX Global Electronics Exchange, which supported anonymous internet transactions with human assistance around the clock, six days a week. NECX background
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Under the announced integration plan, NECX Exchange would sit within VerticalNet’s Advanced Technologies Group. VerticalNet intended to use NECX’s market knowledge, logistics, and user base to support transactions across its online-community portfolio. NECX president Larry Marshall described the intended result as a “one stop shop” for spot and open-market customers. EE Times VerticalNet announcement
What happened to NECX after the acquisition?
In December 2000, eHitex announced that it would acquire NECX from VerticalNet. The announced consideration was $60 million in cash plus a 19.9% equity interest in Converge and a board seat for VerticalNet. eHitex later renamed itself Converge. eHitex/Converge announcement
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At the time of the sale announcement, Converge described NECX as matching buyers and sellers of electronic components and computer systems, with more than $1 billion in annual trading across North America, Asia, and Europe. That is a contemporaneous description of the business at sale, not proof that the 1999 integration achieved every goal VerticalNet had set. The cited announcements do not provide a definitive audited assessment of those original targets. Converge announcement
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the deal reveals about B2B marketplaces
The acquisition reflected a late-1990s strategy to connect industry content and professional communities with online commerce. VerticalNet supplied the community structure; NECX supplied access to electronics products, trading relationships, and transaction operations. The strategic bet was that putting those pieces together could make online industry communities more useful to buyers and sellers by helping them move from finding information to sourcing goods. VerticalNet said it expected greater liquidity and lower distribution and procurement costs, but the announcements alone do not establish whether those expected benefits were realized. Converge announcement
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