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August 29, 2008

Microsoft buys Greenfield Online, only wants Ciao subsidiary

Posted by David Hunter at 10:05 AM ET.

Ciao logo Microsoft today announced the acquisition of online survey firm Greenfield Online for US$ 486 million, but also revealed that they are in turn selling off all of the company to an unnamed buyer except for subsidiary Ciao GmbH, "one of Europe’s leading price comparison, shopping and consumer reviews sites." Rafat Ali at explains that this rather convoluted deal is actually even more complex:

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 (NSDQ: MSFT), 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.

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, [the] Ciao unit contributed $5.6 million out of a total operating income of $11.7 million.

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.

All of this is in furtherance of Microsoft’s pursuit of commercial search as the ticket to success in its quest to defeat Google (cf. Live Search cashback and the recent reorganization). However, while shopping sites certainly are a remunerative niche, they really don’t really dislodge Google from its gatekeeper role on all searches, commercial and otherwise.

Filed under Acquisitions, Coopetition, Google, Live Search, Microsoft, Windows Live

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