Saturday, August 30, 2008

Microsoft buying web-based survey company Greenfield for $486M

LONDON — Microsoft on Friday said it will buy Web-based survey company Greenfield Online for about $486 million in cash in a move that will bolster its search and e-commerce services in Europe.

Microsoft will pay $17.50 a share for Greenfield. The deal tops an earlier proposal by buyout firm Quadrangle Group to acquire the company for $15.50 per share.

The Microsoft offer represents a premium of about 10 percent to the closing price of Greenfield shares Aug. 25, the day before it said it had received a $17.50 acquisition offer.

The deal, Microsoft's first since it failed to acquire Yahoo for $45 billion, will give the software giant access to, which provides consumer reviews and ratings along with comparison prices from online merchants in Europe.

"The team at Ciao has built a passionate consumer community based on intuitive technology and extensive merchant relationships that we believe will deliver incremental benefit to the Microsoft Live Search platform," said Tami Reller, chief financial officer for Microsoft Windows and Online services.

Microsoft, which handles about 9 percent of Web searches in the U.S., has an even lower share abroad. The company is adding more services that help consumers find products on the Internet, an area where it says its software is more effective than Google's.

"Almost all of the revenue from search advertising comes from transactional searches," Charles Di Bona, an analyst at Sanford C. Bernstein & Co. in New York, told Bloomberg News. Improving the results for those queries is Microsoft's best chance to make more money, he said.

Munich-based Ciao operates in Germany, the United Kingdom, France, Italy, Spain, the Netherlands and Sweden.

The company said its sites get more than 26 million unique visitors a month, 4.4 million of them in Germany, and so far has generated more than 5 million product reviews. Cio was founded in 1999. Greenfield paid $154 million for it in 2005.

Ciao will be integrated into Microsoft Live Search.

Microsoft said it will sell off Greenfield's main business — Internet survey solutions — to an unnamed financial buyer. The unit sells consumer opinions in the form of surveys to marketing research companies.

It expects the acquisition of Greenfield and the sale of its survey-solutions business to close simultaneously in the fourth quarter.

Greenfield will pay a $5 million termination fee to Quadrangle.

Greenfield shares closed up 0.1 percent to $17.25 on Thursday. Microsoft shares closed up 1.4 percent to $27.94.