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Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →VerticalNet agreed on November 16, 1999, to acquire NECX Exchange for $10 million in cash and approximately $95 million in VerticalNet stock—about $105 million in announced consideration. The deal was expected to close by the end of 1999. NECX was both an electronics distributor and a trading exchange, with much of its trading still assisted by sales associates rather than completed through fully online ordering.
How much did VerticalNet pay for NECX Exchange?
The announced terms were $10 million in cash plus approximately $95 million in VerticalNet stock, for total consideration of about $105 million. VerticalNet and NECX announced those terms in November 1999; the transaction was expected to close by year-end. The $105 million figure describes the original acquisition, not NECX’s later sale to Converge. EE Times and InternetNews reported the announcement.
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What was NECX Exchange?
Peabody, Massachusetts-based NECX bought and sold semiconductors, electronic components, computer products and networking equipment. It served customers seeking components on the spot market as well as businesses selling excess inventory. The exchange combined online-market infrastructure with people who helped arrange trades; at the time of the announcement, sales associates handled much of the transaction activity. So “electronics exchange” describes its market function, but it should not be mistaken for a fully automated online checkout operation.
NECX’s scale was substantial by the figures reported at the time. EE Times reported NECX revenue of $350 million and gross profit of $37 million for 1998. VerticalNet estimated that the combined operation would connect 18,000 trading partners and offer more than three million products in online inventory. These are contemporaneous company figures and estimates from 1999, not current operating statistics. EE Times and InternetNews covered the announcement and scale claims.
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Why did VerticalNet buy NECX?
VerticalNet ran online business-to-business communities in multiple industries. NECX brought electronics-market expertise, component trading, logistics and back-office operations, as well as an established global user base. VerticalNet presented the combination as a way to build a large online trading community for engineers and purchasing professionals—not simply as a purchase of a product catalog.
Geographic reach was part of the rationale. Company figures reported by EE Times said 40% of VerticalNet users and 45% of NECX users were international. VerticalNet president Mark Walsh said NECX’s market knowledge and user base in Europe and Asia would strengthen the company’s transaction and market-making capabilities. EE Times
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How was NECX integrated, and what happened afterward?
VerticalNet placed NECX in its Advanced Technologies Group and retained NECX president Larry Marshall. NECX Direct, the computer-products business, continued under its founder, Henry Bertolon. That arrangement tied NECX’s electronics trading operation to VerticalNet while keeping the computer-products business under its existing leadership. InternetNews
In December 2000, VerticalNet agreed to sell NECX to Converge, formerly eHitex, for $60 million in cash, a 19.9% equity stake in Converge and a board seat. A separate $107.5 million software and services agreement between VerticalNet and Converge was also part of the broader transaction arrangements; it was not part of the original NECX purchase price. Converge CEO Robert Lewis described NECX as giving Converge a global trading position across more than 180 product families, supported by logistics and operational capacity to buy, sell and move products internationally. InternetNews
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