Fab is buying a Finnish company that designs and manufactures furniture and then sells it online, reports Re/Code’s Jason Del Ray.
Fab confirmed to Del Ray that it signed a term sheet for the cash and stock deal, but didn’t disclose the name of the company or the cost.
Del Ray’s sources said that this purchase will likely lead to the creation of a new shopping site that will sell the company’s custom furniture. According to a Fab spokesperson, home furnishings are Fab’s “most profitable business stream.”
Although Valleywag just reported that the company was burning as much as $US9 million per month and would shut down by the end of the year, a Fab spokesperson said that the burn rate is only $US1.6 million a month and it has enough cash to sustain it for several years. As part of its new plan, Fab has cut staff in the U.S. and will concentrate most of its workforce in India, Eastern Europe and Germany.
Once seen as the golden child of the e-commerce world, and after having raised more than $US330 million in funding, Fab has had a rough year, including declining site traffic, product pivots, departures from top executives, and lay-offs. That has reduced its number of U.S. employees to a fraction of what it once was. Re/Code’s sources also say that there might be still be more lay-offs to come.
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