Shopping.com was bought by eBay on June 1 for $620 million. With Shopping.com’s aprx. $144 million dollars in cash in the bank at the time, the ‘real’ price of the deal was $476m. I estimate that Shopping.com will have aprx. $130m in revenue for 2005 which means the deal is valued at 3.7x revenue.
Shopzilla was bought by EW Scripps on June 6 for $560 million ($525m in cash plus “net working capital of about $35m“). I estimate that Shopzilla will have aprx. $144m in revenue for 2005 which means the deal is valued at 3.9x revenue.
PriceGrabber is being bought by Experian for $485 million. Experian says that PriceGrabber is expected to have revenues of $60m which means the deal is valued at over 8x revenue.
From a revenue perspective, this deal looks extremely expensive:
Shopping.com was valued at 3.7x revenue
Shopzilla was valued at 3.9x revenue
PriceGrabber is valued at 8.1x revenue
Looking at this from an earnings perspective might tell a different story.
Next post coming soon…
A better way to evaluate the deals is to look at projected 2006 EBITDA’s for the companies. I think you will see that the comps are very similar (12-13x). The interesting metric is how much PreTax profit Pricegrabber generated. Not so surprising once you factor in the fact that they are not as highly dependant on SEM for their traffic.
The “real” price you refer to here is called “enterprise value” in financial terms. So the mutiples you’ve come up with here are more like “enterprise value over revenue ratios.” To be more accurate, enterprise values also need to add the debt the company is holding, which would make the calculation a little more complicated.
I think PriceGrabber just grabbed a good price. No wonder the name “PriceGrabber”. They probably have done some comparison shopping before making the deal.
Meng