Updated from 6:13 p.m. EDT
Mountain View, Calif.,-based eBay will pay $21 a share for Shopping.com, a company based in Brisbane, Calif., that specializes in comparison-shopping. Shopping.com closed Wednesday trading at $17.44, up 2.2% for the day, so eBay is paying at least a 20% premium over the value the market most recently gave to the company.
The $620 million price tag is 4.7 times Shopping.com's estimated sales for 2005 and 4.4 times Shopping.com's cash, cash equivalents and marketable securities as of May 31. By comparison, the $1.85 billion that IAC/InterActiveCorp (IACI) is paying for search engine Ask Jeeves (ASKJ) is 4.8 times Ask's estimated 2005 revenue.In after-hours trading, Shopping.com's stock was up another 20% at $20.88. eBay was down 1.3% at $38.60 in after-hours trading at $39.11, erasing some of the 3% gain in the Wednesday session. Bill Cobb, president of eBay North America, said the purchase of a search engine focusing primarily on traditional e-tailing sites doesn't mark a shift away form eBay's core market of online auctions. Instead, he said, the acquisition was made in response to needs voiced by the mom-and-pop retail shops that populate eBay's online marketplace. "A lot of our bigger sellers are by nature looking at many ways to sell their product," Cobb said. "We want to be servicing that need." Some of eBay's larger sellers, many of whom built their businesses by catering to the value-driven customers who flocked to eBay's auction site, have been itching to