particleman - 3:05 pm on Nov 10, 2012 (gmt 0)
Buying their domain/brand and immediately redirecting to yours is a mistake in my opinion, especially if it is different product offerings. You'll likely lose the repeat customers this way very quickly which is the cornerstone of an established business.
My advice change nothing at first. You mentioned a lot of inventory, but you should have access to past sales information. Maybe you could trim down products that are slow sellers, or combine your current products into the new site? This is hard to say without knowing your specific type of business.
My experience having one or more related sites that stand alone is a great insurance policy these days and is just a good way to diversify your business. Overall it sounds like a great opportunity you shouldn't pass up.