Cable legend John Malone, just days after converting his super-voting shares in Discovery Inc. to common stock for no premium to help facilitate its merger with WarnerMedia, has agreed to sell his Class B shares on TV and online retailer Qurate Retail Group to long-time lieutenant Greg Maffei, for about $400 million in cash or stock.

News of the filing first appeared in The Information. 

Qurate includes the two largest home shopping channels -- QVC and HSN -- as well as online retailer Zulily, Cornerstone Brands and green energy and other investments. .  

Malone, 80, helped found the modern cable business as chairman of Tele-Communications Inc., and has left his mark on practically every major cable deal in the past 20 years. He agreed on May 18 to sell his Qurate super-voting shares, which give him 41% voting rights in the company, to Maffei for $14 per share, according to Securities and Exchange Commission documents. Qurate stock currently trades around $13 per share. According to the filing, Malone would get paid in either cash, stock “or such other form of consideration as to which Mr. Maffei and Mr. Malone may mutually agree.”  

Maffei, who is CEO of Liberty Media and chairman of Qurate and several other Liberty holdings, joined Malone in 2005 after stints at Microsoft,  360Networks and Oracle. The two have been partners on several big deals, including the 2013 purchase of a 27% interest in Charter Communications. 

According to the SEC document, Malone agreed to the sale on May 18, pending board approvals. The document added that while he supports Qurate’s long-term strategy, he wanted to accept Maffei's offer “because it would provide flexibility for certain long-term estate and tax planning goals in light of potential changes in federal tax laws.”

The document continued that the sale is contingent on the approval of Qurate’s board of directors. Qurate also has call rights to Malone’s Class B shares, and if the company exercises that right, Malone said he would prefer to receive payment in the form of Qurate common stock, “such that he would continue to hold a substantial investment in Qurate Retail.”

Malone earlier agreed to convert his Class B super-voting shares in Discovery, which usually carry 10 votes each, on a 1:1 basis into common shares for no premium, a move that helped Discovery move forward with its planned merger with WarnerMedia. In a statement after that deal was announced, Malone said that he neither asked for nor received a premium for converting his Discovery stake. 

“I believe we are creating real value for shareholders and a legacy investment for my grandkids,” Malone said in the statement. 

Discovery’s super voting shares usually trade at around the same price of its common stock, but in the past several months, because of a sell-off by hedge fund Archegos Capital (which also shorted ViacomCBS stock), their value has soared. Bloomberg estimated that Discovery’s Class B shares have traded as high as $128 each at one point -- more than four times the Class A share price of around $32 per share. By converting his Class B shares on a one-for-one basis, Bloomberg estimated that Malone could lose about $280 million on the deal. 

That is in contrast to Discovery’s other major holder of super-voting shares -- Advance Publications, controlled by publishing giants the Newhouse family -- which according to Bloomberg will receive 13.1 shares of the new entity for every Class B share they own. Advance also will receive  the right to nominate two board members to the new entity.

Some analysts saw Malone’s Discovery deal as his way of helping to push the transaction forward. And he still will be a large shareholder after the deal closes, meaning he will participate in any upside in the stock price in the new entity. Some have predicted that the new Discovery-WarnerMedia could be valued at as much as $46 per share, well above the current $32 price of the stock on Thursday. 

QVC Group, the home shopping arm of Liberty Interactive, has agreed to purchase online retailer zulily in a deal valued at about $2.4 billion.

Liberty Interactive will acquire zulily for $18.75 per share – about $9.38 per share in cash and 0.3098 shares of Liberty stock for each zulily share. The purchase price represents a 49% premium to zulily's closing price Froiday of $12.57 per share. Funding for the cash portion of the deal is expected to come from cash on hand at zulily and QVC’s revolving credit facility.

The acquisition will be attributed to Liberty Interactive’s QVC Group tracking stock.

Zulily was formed in 2010 by Darrell Cavens and Mark Vadon, catering to young families and holding “flash” sales for clothing, home décor, toys and other products. The company went public in 2013 and counts Chinese e-commerce giant Alibaba Group as one of its larger shareholders, but has seen its sales sink in the face of stiff completion from Amazon and other online retailers. The stock has been down about 65% in the past 12 months, but was up 47% ($5.92 per share) to $18.49 each on Monday after the Liberty deal was announced.

“We are excited for zulily to join the Liberty family,” said Liberty Interactive CEO Greg Maffei in a statement.  “Darrell, Mark and their team have built an impressive business around entertainment, discovery and value to the customer, which fits perfectly with the QVC philosophy.  Combined under Liberty, we have an incredible opportunity to delight shoppers from the TV to the Internet.”

The deal is expected to be complementary to Liberty and help strengthen QVC’s position in experiential, discovery driven shopping.  QVC and zulily will be operated as separate consumer brands, but it is anticipated that the combination will help boost zulily’s global scale, vendor relationships and video commerce expertise, while QVC will benefit from a younger customer demographic, personalization expertise and e-commerce capabilities.

“As the world leader in video and e-commerce retail, QVC is dedicated to reimagining shopping, entertainment and community as one,” said QVC CEO Mike George in a statement.  “In zulily, we see a like-minded brand that shares our passion for discovering great products, for delivering honest value, and for building long term relationships with customers.  Our teams are committed to learning from and inspiring each other and leveraging our platforms in new ways to accelerate growth, serve our customers better, and realize the full potential of both of these extraordinary brands.”

Zulily will remain based in Seattle and Cavens, currently President and CEO, will remain in that role. George is being appointed to the Executive Committee of the Liberty Interactive Board of Directors and will serve on that committee with Liberty chairman John Malone and Maffei.  Cavens will report directly to George and the other members of the Executive Committee.  In addition, Vadon will join the Liberty Interactive Board of Directors.

“Mark Vadon and I are incredibly excited to announce our partnership with QVC.  QVC has built an amazing business with a great culture and incredibly similar understanding for bringing entertainment, discovery and value into the daily customer experience.” Cavens said in a statement.  “This combination under Liberty is about investing in our future and providing a tremendous opportunity to accelerate our platform for growth of the zulily brand through the partnership with QVC.”

The transaction has been approved by the boards of directors of both companies and should close during the fourth quarter. 

Baker Botts L.L.P. is acting as legal advisor for Liberty Interactive.  Goldman Sachs is serving as financial advisor for zulily and Weil, Gotshal & Manges LLP and Cooley LLP are acting as legal advisors.