Amazon Branded, Heyday aggregators plan to merge as industry shrinks

Amazon Aggregators Branded and Heyday plan to merge, CNBC has learned, as a segment of the e-commerce industry that boomed in the Covid era continues to consolidate.

In a note to staff on Monday, Heyday CEO Sebastian Rymarz said the combined companies would create a new entity called Essor, which translates to ‘flight’ in French, “capturing our vision of elevating the brands to new heights through our platform.” he wrote

The new name will be officially launched in the coming days, and the combined companies are expected to generate $400 million in annual revenue, Rymarz wrote.

Apollo Global Management and BlackRock are in talks to provide new debt financing to help the combined entity make further acquisitions, according to Bloombergciting people familiar with the matter.

“The merger is the culmination of an effort that began more than a year ago to find a partner that could help advance our mission, accelerate progress toward our goals and strengthen our balance sheet, as we’ve talked about in the past,” Rymarz said. he said. “Branded is the perfect partner.”

Representatives for Heyday and Branded did not immediately respond to requests for comment. BlackRock declined to comment and Apollo did not immediately respond.

In connection with the merger, Heyday is expected to carry out a massive round of layoffs that could result in up to 70% of employees losing their jobs, according to a person familiar with the matter who asked not to be identified because the cuts do not have been announced. Branded will absorb Heyday’s technology team and several brands, the person said, including skin care lines ZitSticka and Boka, which makes fluoride-free toothpaste and other dental care products.

Heyday and Branded are part of Amazon’s busy and turbulent marketplace of seller aggregators. Companies in the space have collectively taken advantage of low interest rates and pandemic-induced e-commerce growth raise more than $16 billion from top names on Wall Street and Silicon Valley with the intention of bringing independent sellers to Amazon’s marketplace. The aggregators have attracted the attention of high-profile investors such as L Catterton, BlackRock and even Jared Kushner’s Affinity Partners.

The cracks began to appear in 2022 as venture funding dried up for cash-burning startups and e-commerce demand waned as consumers returned to brick-and-mortar stores. Consolidators suddenly found it difficult to profitably operate the brands they acquired.

Former flagship Thrasio, an early leader in the pool, filed for bankruptcy in February and lost several key executives. Consolidation among aggregators has accelerated in the past year. Before the deal with Paris-based Branded, Heyday explored a possible tie-up with Dragonfly, whose backers include L Catterton, before talks collapsed, CNBC previously reported.

CLOCK: What’s Behind the Hype and the Billion Dollar Aggregators Buying Amazon Sellers