PFSweb & Daisytek sign letter of intent

Office World News, May 2001

ALUN, TX-Daisytek International Corp. and PFSweb, Inc. has announced the signing of a nonbinding letter of intent that accelerates the process of separating the business operations and functions of the two companies. Under the terms of the letter, Daisytek will acquire certain distribution and fulfillment assets located in Memphis, TN, currently used by PFSweb to provide outsourcing services to Daisytek and it will also assume certain related leases.

Daisytek plans to hire PFSweb employees who currently support the services provided to Daisytek. Additionally, Daisytek and PFSweb will enter into a short-term information technology and transition services fee agreement that will facilitate the separation of Daisytek's and PFSweb's information technology operations and functions. The companies also will terminate all transaction management services agreements between Daisytek and its susbsidiaries and PFSweb and is subsidiaries, other than the agreements whereby Daisytek and PFSweb jointly provide distribution and fulfillment services for IBM in Europe and North America.

Terms of the deal have yet to be finalized, but the transaction is expected to be in excess of $10 million and is conditioned on the negotiation of a definitive agreement, the completion of due diligence, receipt from the IRS of a supplemental private letter ruling that the contemplated asset purchase transaction does not adversely affect any of the rulings set forth in the private letter ruling received last June relating to the spin-off of PFSweb and approval from the board of directors of each company. The closing is expected to occur on May 2, 2001, or as soon thereafter as the conditions to closing are satisfied. Additional terms of the transaction were not disclosed.

"I am happy to be able to announce the progress we have made to reach this agreement," said Mark C. Layton, senior partner and CEO of PFSweb. "It had become apparent that Daisytek's distribution requirements for its evolving office supplies business strategy reached beyond the capabilities of the single Memphis distribution facility that PFSweb has operated on behalf of Daisytek."