VerticalNet, SierraCities.com call off merger

(Telephony) The slumping e-conomy has claimed another victim. Business-to-business e-commerce firms VerticalNet and SierraCities.com have called off the merger they announced in November when VerticalNet said it would acquire all outstanding shares of SierraCities.com.

That offer, which was expected to close by year-end 2000, had been extended to Jan. 16, but "the market was not right for the deal at this time," said a VerticalNet spokesperson. "Both sides are very interested in pursuing other strategic initiatives together."

The combined company would have merged VerticalNet's business-to-business skills with SierraCities.com's financing acumen.

"It was going to be a way that we could provide instant credit and financing on line that would provide an additional service to our users," the spokesperson said. "Obviously, the market has changed considerably since that time and we both decided it wouldn't make sense, given current market conditions."

The merger dissolution followed Monday's announcement that VerticalNet CEO Joseph Galli was leaving after five months on the job to become president-CEO of Newell Rubbermaid and being replaced by the company's co-founder Michael Hagan.

VerticalNet's stock has been pummeled on NASDAQ, dropping from a 52-week high of 148.37 to 5.75 this morning, although it was on the rise after opening the day at 5.

Nevertheless, the spokesperson said the "important takeaway on this was it was a mutual decision because of market conditions and we're looking for other ways to work together. We still think there's a good fit there; it will come about in a little different way."