Israeli shopping search engine DealTime announced today that its has signed a definitive agreement to acquire Epinions, a leading online consumer reviews and ratings platform. The two companies declined to disclose the amount of the deal. The deal’s closure and final price depends on a number of conditions, including shareholder approval. It is expected that it will be closed within the next six weeks.
DealTime stated it expects to fully integrate the Epinions employee team into DealTime’s operations, including Epinions co-founder and CEO Nirav Tolia, who will become DealTime COO. DealTime will continue to operate Epinions’s offices in California, New York and the UK.
The acquisition is intended to augment DealTime’s search technology and shopping tools with Epinions’ consumer reviews and ratings. DealTime will continue to operate the DealTime.com and Epinions.com websites. DealTime chairman and CEO Dan Ciporin said, “This acquisition will unite a uniquely valuable content platform with proven shopping search tools and technologies. Epinions’s robust database of consumer reviews and ratings helps millions of shoppers make smarter buying decisions, resulting in the highest quality referrals for merchants.”
Founded in 1999 by a group of former Yahoo! (Nasdaq:YHOO) employees, Epinions found itself in financial difficulties in recent months. The company relied on an innovative business model that included offers to pay surfers a percentage of revenue for reviewing products. At its peak, Epinions was able to show a million consumer reviews, but was unable to generate substantial revenue.
DealTime and Epinions recently expanded their operations into new fields. As part of its recovery effort, Epinions tried to enter the online price comparison market - DealTime’s business. At the same time, DealTime began providing surfers’ consumer reviews of products.
Nielson ratings reported that in January 2003, DealTime had 9.4 million users and Epinions 5.8 million. The combined figure will make DealTime the fifth-largest online shopping site, in terms of users, after Amazon.com, eBay, Yahoo! Shopping, and MSN Shopping.
DealTime has had difficulties in the past two years, laying off scores of employees and canceling plans to hold an IPO on Nasdaq. Founded in 1997, DealTime has raised $75 million. Its investors include AOL Time Warner (NYSE:AOL), Odeon Capital, Nomura Bank, Singapore Telecom, Bank of America and Israeli venture capital funds Israel Seed Partners and Israel Infinity Fund.
DealTime raised $50 million at an estimated company value of $225 million in early 2000. The company filed its prospectus for a Nasdaq IPO a few weeks later, hoping to raise $50 million.
In the second half of 2000, DealTime founded a joint venture with Germany’s Bertelsmann for an estimated $100 million. It also established a branch in the UK and a subsidiary in Japan, which handled technological development. DealTime, Japan Associated Finance Co. (JAFCO) and Credit Saison Mitsui, Omron Corporation and CSK jointly founded the Japanese subsidiary with a $10 million investment. DealTime owned 60% of the venture. In February 2001, DealTime acquired US company Digital Jones, an online consumer reports site.
DealTime later closed down in German and Japanese activities. It now has 140 employees, down from its peak of 350. Industry sources estimate DealTime’s revenue at almost $30 million, and that the company’s operations are at the break-even point.
DealTime raised $3 million in an internal financing round led by Bertelsmann Ventures a few months ago. Bertelsmann is also a shareholder in Epinions, leading the company’s last financing round in February 2001, which raised $12 million. Other investors in Epinions are Benchmark Capital, August Capital, Goldman Sachs, BV Capital, Dell Computer (Nasdaq:DELL), and Bowman Capital. Epinions raised $47 million altogether.
Published by Globes [online] - www.globes.co.il - on March 12, 2003