VerticalNet Inc. has bought Commerx Inc.'s PlasticsNet.com Web site, transforming it from one of the first to trade plastics online to one of many owned by VerticalNet.
The transaction, completed Feb. 21, signals the denouement of Commerx's plan to create an online plastics community through its once-lauded PlasticsNet site. PlasticsNet launched in 1995.
Horsham, Pa.-based VerticalNet operates 58 other electronic-business Web sites, including ElastomerSolutions.com and PaintandCoatings.com., both started in 2000. Terms of the deal were not disclosed.
"[PlasticsNet] is where we originally found success," said Commerx spokeswoman Devon Kim. "It was definitely exciting in 1995. But it's not what we do now."
The Westchester, Ill.-based company had sought a buyer for PlasticsNet since last fall, Kim said. Prior to that, in June, Commerx had announced plans to shift from its public catalog and trading exchange model to become a provider of technology for electronic purchasing and online collaboration.
One of its customers is injection molder Nypro Inc. of Clinton, Mass. That company now does about half its resin purchases through Commerx's Web-hosted system, Kim said.
But Commerx has had its share of Internet turmoil, as have many business-to-business companies. Its primary outside investor, Internet Capital Group Inc. of Wayne, Pa., has hit the shoals, posting a fourth-quarter loss of $200 million.
Commerx now has 54 employees, down from as many as 165 last summer. Founders Tim and Nick Stojka resigned from day-to-day operations in October but still sit on the company's board of directors. Tim Stojka also is Commerx chairman.
VerticalNet's interest in Commerx's plastic exchange was a bit puzzling to several outside analysts, who said it belied some of the changes that company has announced.
VerticalNet has said plans to focus on providing technology to companies through its Vertical-Net Solutions unit. Former Chief Executive Officer Joseph Galli, who left in January to join Newell Rubbermaid Inc., had driven that shift.
"They said they wanted to push into the software space," said Gavin Mlinar, an equity analyst with New York-based Sands Brothers & Co. "But they're a late entrant to that game. We felt it would be difficult to scrap their plans and become a systems company now."
If the shift into software is still moving forward, VerticalNet will compete against larger companies such as Ariba Inc. and Commerce One Inc., Mlinar said. Another analyst, who did not want to be identified, said VerticalNet's change in top management might have fueled renewed interest in its public marketplaces.
VerticalNet promoted founder Michael Hagan to president and CEO in January. In a conference call Feb. 22 to analysts, Hagan said the PlasticsNet acquisition would add to its community of manufacturers on its multifaceted sites.
"PlasticsNet's rich heritage and our supplier network will allow us to succeed where others might have failed," Hagan said.
The company plans to continue PlasticsNet's content and community focus, including chat rooms, news, supplier sourcing and product catalogs, said VerticalNet spokeswoman Nyssa Tussing.
Microsoft Corp. has agreed to work with VerticalNet during the next three years, creating Internet storefronts for 80,000 small and medium-size businesses. On those storefronts, called Internet shopping malls, customers can buy goods from companies and share information.
Commerx had discontinued resin trading on PlasticsNet in December but had allowed companies to conduct online negotiations over the site, Kim said.
Tussing said VerticalNet plans to offer both online marketplaces and software products. Other VerticalNet executives, including Hagan, were unavailable prior to deadline.
VerticalNet has undergone some trouble of its own. On Jan. 26 it announced layoffs of 150 employees, about 8.3 percent of its work force. Its stock price has slid from a high of $148 a share in March 2000 to 52-week lows of under $4 a share in February.
For the 2000 calendar year, VerticalNet's sales increased 510 percent to $112.5 million. But the company posted a loss of $97.6 million.
That news, and its stock price slump, did not elate analysts.
"They need to reach a larger-scale mass of people," Mlinar said. "It's a company that's still trying to find an identity."
But the VerticalNet spokeswoman said the opportunities with PlasticsNet are immense.
"They've been a recognized leader for the plastics industry for more than five years," Tussing said. "They join a marketplace with solid revenues and traffic. It fits in so well with what we're doing."
VerticalNet has not yet determined how many PlasticsNet employees would be included in the deal, Tussing said. Top executives for the Web site also have not been named.