Microsoft Beats Quadrangle To Buy Research Firm Greenfield For $486 Million

• Posted: Friday, September 05, 2008
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• Author: pradhana
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• Filed under: Merger-Acquisition, Microsoft

By Rafat Ali

In a complex and slightly confusing transaction, Greenfield Online, the online market research and surveys company, which earlier this week rejected a bid by media PE firm Quadrangle, is now being bought by an unlikely buyer: Microsoft, for about $486 million, $60 million more than the previous bid. MSFT is paying through a cash tender offer for $17.50 per share for the Wilton, Conn-based firm, as opposed to Quadrangle’s $15.50 a share bid.

BUT, as part of this buyout, Microsoft will sell off what Greenfield is best known: its online surveys division, and will only retain its European comparison shopping services part. Greenfield, through its Greenfield Online and its European Ciao comparison shopping websites and affiliate networks, collects, organizes and sells consumer opinions in the form of survey responses to marketing research firms and end users. It was founded in 1994, among the first such online survey firms, and current CEO Albert Angrisan is the former COO and president of survey biggie Harris Interactive.

To give you an idea, for Q208, Greenfield had revenues of $36.0 million, out of which its surveys unit contributed $24.6 million, while the Ciao unit was $11.4 million, though in terms of operating income, Ciao unit was contributed $5.6 million out of a total operating income of $11.7 million.

Ciao’s comparison shopping site combines consumer reviews and ratings from a “multimillion-user-strong” online community, and prices from online merchants. It currently has more than 26.5 million unique visitors per month, according to Comscore, across seven countries, who so far have generated about 5 million product reviews. It was founded in Munich in 1999 and in 2005 Greenfield bought it.

MSFT says it has found an as-yet-unnamed financial buyer for Greenfield’s Internet survey solutions (ISS) business, and will sell off that part to it. Both these deals are expected to close in Q4 this year, but the consummation of the Microsoft transaction is not contingent on the sale of the ISS business. So essentially for MSFT, it is a European expansion deal, and will give it heft in the market...it says it will integrate Ciao’s technology into Microsoft Live Search platform and will also get its merchant relationships as a result.

Under the earlier deal, which had a go-shop provision, Quadrangle had the right to match any superior offer, but turns out it decided not to, and Greenfield Online is required to pay Quadrangle a $5 million breakup fee. It could be that the un-named financial buyer for the surveys unit is Quadrangle itself, but no hints in the company statements.

As a side note, curious if MSFT also looked at buying Kelkoo, the European comparison shopping engine that Yahoo bought in 2004 for a price of about $575 million, but now wants to sell off. [paidcontent.org]

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