27 June 2000

America’s two biggest online grocers are set to merge with yesterday’s announcement by Webvan of an all-stock acquisition of valued at $1bn. The deal will boost Webvan's cash reserves to $650m, though it will still need to raise another $275m to complete its expansion plans over the next 12 months, according to chief executive George Shaheen.

The move failed to ease concerns about the huge costs and uncertain outlook faced by online companies trying to build nationwide online retailing businesses, and shares in both companies sank 15% per cent in early trading yesterday.

News source: Financial Times