New York — Microsoft Corp. today announced that it has agreed to acquire Greenfield Online Inc., owner of Ciao GmbH, Europe’s leading price comparison, shopping and consumer reviews sites, for $486 million, in an attempt that will further boost its Internet search and e-commerce business in Europe.
According to the terms of the agreement, Microsoft will setup a cash tender offer to buy all of the outstanding shares of Greenfield Online for $17.50 (US) per share in a transaction valued at approximately $486 million (US).
“We call it ‘instant answers’,” said John Mangelaars, head of Microsoft’s consumer and online business in Europe.
“I hope it is getting very clear that we are very serious about Emea,” he added. Internet search is dominated by Google, which has 62 per cent of the global search market and 79 per cent in Europe, according to web usage tracker comScore.
Ciao is an extensive source for well-informed shopping on the web, combining consumer reviews and ratings from a multimillion-user-strong online community with up-to-date price information from thousands of online merchants.
It currently has more than 26.5 million unique visitors per month (source: comScore Inc, May 2008) across seven countries, who so far have generated more than 5 million product reviews. In order to lure more users, Microsoft also plans to reward consumers who buy products through its shopping sites by giving them cash back, extending a trial started in the United States a few months ago.
“Google is trying to do all your search needs. What Microsoft is doing with this kind of acquisition is saying: ‘We are going to be very good at the commercial side of search, the shopping’,” said Forrester principal analyst Rebecca Jennings.
Microsoft owes a two per cent market share in Europe and nine per cent worldwide, behind both Google and Yahoo. In Europe, Microsoft is also outranked by online auction site eBay and Russia’s Yandex.
The acquisition indicates a further milestone investment for Microsoft in Europe and would help Microsoft increase its European commercial search capabilities as part of its goal to make Microsoft Live Search the premier destination for consumers looking to research and purchase goods and services online, as well as enable merchants to drive greater online sales.
Ciao’s technology platform, online community and extensive merchant relationships will be integrated within the Live Search platform to deliver a richer, more rewarding experience for both advertisers and consumers.
Herve le Jouan, comScore’s managing director, Europe, agreed. “Doing this shopping thing, I think, is a good move,” he said, but cautioned that acquisitions alone would never bring Microsoft close to Google’s market share in search.
“Nobody is able to compete right now with Google so there is nobody to buy to compete with Google,” he said.
But Microsoft’s Mangelaars asserted that buying ciao.com was an important step in its attempt to distinguish itself by providing search results more useful to consumers, particularly shoppers, than those thrown up by a Google search. For example, results of a Microsoft search for a particular camera model could include which prices were available from which retailers, and maps of where those retailers were, rather than just links to the manufacturer’s and retailers’ sites.
“It is a race,” he said, “but we also believe it is very early days in search technology.” Microsoft’s offer of $17.50 per share betters an earlier proposal by media-focused US buyout firm Quadrangle Group to acquire the company for $15.50 a share, and represents a slight premium to Greenfield’s closing price of $17.25.
Speaking on the announcement, Albert Angrisani, president and CEO of Greenfield Online, said, “We are proud of the community that we have helped to establish, and we are looking forward to exploring the new opportunities, technologies and relationships that Microsoft and the Live Search platform can unlock. Like Microsoft, we are passionate about delivering a great end-to-end commerce search experience. Today’s announcement will significantly accelerate our ambition and will deliver real benefit for consumers and merchants across Europe.”
Upon close of the agreement, the Ciao business will report to Rajat Taneja, general manager for Worldwide Commercial Search at Microsoft.