The deal allows U.S. cable TV mogul John Malone to fully merge HSN with Liberty Interactive's QVC network.
The all-stock offer is worth $40.36 per HSN share, a premium of 29 percent to the stock's Wednesday close. HSN's shares jumped 33.9 percent to $41.90 in early trading on Thursday. Liberty Interactive's shares were up 4.1 percent at $25.45.
The deal, which gives HSN an enterprise value of $2.6 billion, will help Liberty develop its e-commerce and mobile shopping platforms and improve its programming content across its networks, the company said.
The HSN group consists of HSN, its home shopping business, and Cornerstone, which includes home and apparel lifestyle brands including Ballard Designs, Frontgate and Garnet Hill.
HSN shareholders will receive 1.65 shares of Series A QVC Group stock for every share held, Liberty Interactive said.
HSN will be overseen by QVC Chief Executive Mike George and will remain headquartered in St. Petersburg, Florida.
Allen & Co is the financial adviser to Liberty Interactive, while Baker Botts LLP is the legal adviser.
Centerview Partners and Goldman Sachs Group are the financial advisers for HSN. Davis Polk & Wardwell LLP is the legal adviser.
Reporting by Narottam Medhora in Bengaluru; Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty