A recent acquisition sets the stage for the MMTT emerging business concept.

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eBay puts Shopping.com in its cart
by David Shabelman Jun-1-2005 - TheDeal.com

Online auctioneer eBay Inc. expanded its offerings Wednesday, June 1, with the acquisition of online comparison shopping service Shopping.com Ltd. for $620 million cash.
Shopping.com lets users search for an item, then provides links to Web sites that sell the product and to consumer reviews. The company makes money by charging merchants a referral fee after a user clicks through to the merchant’s site. According to terms of the deal, San Jose-based eBay will pay $21 a share for Shopping.com – a 20% premium to its closing price of $17.44 on Wednesday. eBay spokesman Hani Durzy said the company approached Shopping.com regarding an acquisition, and the deal came together quickly once the companies realized they made a good fit.

“We are always seeking to help our community of sellers evolve as they grow their businesses,” Durzy said. “What we think this does is give eBay sellers a new, and we hope complementary sales channel as well as a new set of buyers. From a buyer’s point of view, people who come to Shopping.com, their shopping experience will be enhanced by the inclusion of eBay listings to the selection of product already available to them.”

According to comScore Media Metrix, Shopping.com was the third most trafficked online retail site in April, with 63.8 million unique visitors, trailing only Amazon.com Inc. of Seattle with 129.9 million unique visitors and eBay itself with 165 million unique visitors. comScore data also reveals that 13.8 million users visited both Shopping.com and eBay in April. Whereas 22% of eBay visitors also visited Shopping.com sites in April, 61% of Shopping.com visitors also used eBay.

“It makes a lot of sense for both companies because of the similarities between their business models,” said Richard Fetyko, research analyst with Merriman Curhan Ford & Co. in New York. “eBay has created an online exchange of goods, but they’re not a retailer, they’re just facilitating the sale of goods on their site. So this is essentially a similar concept. Shopping.com doesn’t sell products on their own, they allow merchants to advertise and sell goods on the Web site.”
Shopping.com is based in Brisbane Calif. and Netanya, Israel. It went public in October 2004 at $18 a share, gaining 60% in its first day of trading to close at $28.80. The stock traded as high as $33.95 in November, but fell below $12 in May due to a combination of factors, according to Fetyko, including market conditions, higher-than-expected expansion costs in France and Germany, and accelerated selling once the stock went below its $18 offer price.
“It probably shouldn’t have been at $30, but it wasn’t a $13 stock,” Fetyko said. “The truth is somewhere in between, which is where eBay bought it.”

Fetyko said there were rumors before Shopping.com went public that Google Inc. was interested in the property, and he said it was possible Google could still get involved in bidding for the company. The two companies currently have a distribution agreement.
Matthew L’Heureux, George Lee and David Fishman of Goldman Sachs served as financial adviser to eBay, while David Poppowitz, Jonathan Turner and Ethan Zweig, James Kim, David Keh and Mike Jensen of Credit Suisse First Boston served as financial advisers to Shopping.com.
Keith Flaum, Jane Ross and Wei Chen of Cooley Godward LLP in Palo Alto, Calif. served as outside legal advisers to eBay. Gordon Davidson, David Michaels, Cynthia Clarfield Hess, Gregory Roussel, and Garth Bossow of Fenwick & West LLP’s Mountain View, Calif. office served as outside counsel to Shopping.com.

Shopping.com was formed in March 2003 through a merger of shopping site DealTime Ltd. and consumer review and ratings Web site Epinions. DealTime had plans to go public in 2000 before withdrawing its registration statement amid Internet industry turmoil.
In 2004, the company reported net income of $12.2 million on revenues of $99 million versus net income of $6.9 million on revenues of $67 million in 2003. It reported net income of $3.9 million on revenues of $28.9 million in the first quarter of 2005. The company has $140 million in cash and securities.