Fashionmall Drops as New Suitor Emerges

Fashionmall.com (Nasdaq: FASH) was down 1 9/32 at 2 27/32 in early trading Tuesday after the company -- which last week received two buyout offers in as many days -- said it was not for sale, though its chief executive said management would look at one of the offers.

On Friday, Fashionmall rose 1 19/32 to 4 1/8 after GenesisIntermedia.com (Nasdaq: GENI), a marketing and advertising company, said it had acquired a 7 percent stake in the company and had offered to buy the remainder for US$7 per share in cash and stock.

Genesis, which owns the Centerlinq shopping-loyalty network, said the Fashionmall acquisition "would create one of the highest-traffic, most innovative interactive shopping and advertising venues in the U.S."

"The merging of Centerlinq and Fashionmall will create one of the largest networks to serve both the brick-and-mortar world and the Internet," said Genesis chief executive officer Ramy El-Batrawi. "We will also enjoy numerous opportunities to cross-promote Fashionmall partners to Centerlinq members and shoppers in a growing number of malls, and Centerlinq advertisers to Fashionmall users on their home PCs."

The Centerlinq network reaches more than 35,000 consumers through Web access and Internet kiosks in shopping malls. Genesis said it would pay $2 in cash and 0.29 common shares for each share of New York-based Fashionmall.

A day earlier, Fashionmall received an unsolicited bid from Narax, Inc., a Beverly Hills, California-based buyout firm. Narax said it would offer $3.50 per share in cash.

Fashionmall chief executive officer Benjamin Narasin appeared more receptive to Genesis' bid. Though the company is not "seeking to sell itself," Narasin said Friday, officials hoped to obtain additional information from Genesis and directors would "evaluate the proposal in the near future."

By contrast, in a statement Thursday, Narasin said he was skeptical about Narax's offer, in light of the fact that the buyout firm did not negotiate with Fashionmall prior to sending a fax outlining its offer. Narasin also said a preliminary investigation "failed to turn up any information about Narax." Moreover, he said, the price of the bid is below the company's book value.

Narasin compared Narax's offer to one the company received in October from Sitestar Corp. that never materialized, and noted that the Narax proposal does "not appear to contemplate any payment to the holders of Fashionmall's preferred stock."