Updated from 6:13 p.m. EDT

In a move that gives its network of small retailers deeper access to Internet searches, eBay ( EBAY) is buying Shopping.com ( SHOP) for $620 million in cash.

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 explore alternative ways of reaching new customers -- such as the sponsored-link ads offered through Google ( GOOG) and Yahoo! ( YHOO).

In addition to instant access to one of the highest-profile comparison-shopping sites, Shopping.com offers eBay a quick route to sponsored-link ads. Nearly half its revenue has been coming by displaying listings from online advertisers, especially Google, which Shopping.com pays when its users click through to the Google advertisers' Web sites.

Cobb said eBay approached Shopping.com only a few weeks ago. "We were impressed with what they were doing and how they structured the assets they had," he said. "The further down the path we got, the more we felt it was an even stronger fit."

Among those assets are Epinions, which Shopping.com bought more than two years ago. Shopping.com said Epinions offers 2 million product reviews from 400,000 independent reviewers. eBay, which is facing a number of lawsuits, is taking on another in this acquisition as former directors of Epinions are suing the company, claiming they didn't get a fair shake when it was purchased by Shopping.com for $31 million.

Cobb and Shopping.com CEO Lorrie Norrington both said it was too early to say whether or how those reviews and Shopping.com's comparison search engine would be integrated into eBay, or whether eBay listings would be given prominence in Shopping.com search results.

"Our intent is to open up all the assets and opportunities that Shopping.com brings to the eBay family and take advantage of them as they make sense," Cobb said.

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