The second major acquisition of 2017 will boost the profitability of a major technology company, with an acquisition of Quest Corp. being planned to help it meet its ambitious targets of expanding to five million people and adding as many as 25 million online members by 2022.
Quest, the world’s largest online retailer, will spend $500 million in the two acquisitions, according to people familiar with the matter.
Quest said in an interview Tuesday that it expects to achieve its goal by 2021.
Quest will also buy a majority stake in its online retailing subsidiary, which is valued at about $600 million, the people said.
The deal will give Quest the ability to expand beyond its existing core online retail business and also to expand into digital commerce, according the people, who asked not to be identified because the negotiations are private.
Quest has struggled to meet its targets, which include doubling its online membership to 10 million by 2022 and achieving a profit of $3.8 billion by the end of the decade.
It said it will add about 20 million members by 2025.
Quest’s stock has fallen more than 20% since its record high in February, partly because of a drop in the dollar that has hurt its sales and margins.
It had reached a $200 million cash infusion from SoftBank in December.
Quest chief executive Steve Buechler and CFO James Lai will join a group of investors who have been working to help Quest become more profitable.
Quest announced in February that it planned to sell its remaining 75% stake in online retail, the company said, with a new board of directors overseeing the sales and marketing and distribution operations.
The $400 million purchase price includes $250 million in cash, a company spokeswoman said.
Quest has said that it is aiming to become a $100 billion retailer by 2021 and that it hopes to achieve the $100-billion mark by 2026.
The purchase will help Quest “reach our targets, build on our strength and create new opportunities for our investors,” Bueckler said in a statement.
“With a strategic focus on expanding online and digital commerce across the globe, Quest is committed to driving growth and profitability by expanding our core business while continuing to strengthen our existing business.”
Quest has not announced a date for the acquisition.
While the acquisition of a larger stake in a technology company is unusual, it is not unusual for a technology firm to acquire a smaller one.
In November, for example, SoftBank’s SoftBank Group Corp. bought an 80% stake and said it planned on expanding into mobile payments, while Amazon.com Inc. announced a $50 billion buyout of its logistics and fulfillment operations.
Quest Corp., which is headquartered in Dallas, is the world-leading online retailer for clothing and shoes.
It was founded in 1992 and is the largest privately held e-commerce company in the world.
Quest also announced in April that it had been awarded a $1.5 billion merger with e-tailer Amazon.