Microsoft Outbids Quadrangle Private Investment Fund by $60 Million for Greenfield

Microsoft has just announced that the software giant is buying Greenfield Online, owner of European network of price comparison, shopping and consumer review websites Ciao. The acquisition is for approximately $486 million so this makes it the most expensive purchase for Microsoft.

What Ciao offers to its users is comprehensive search for products and prices based on up-to-date price information from thousands of online merchants along with reviews of the products by other users. A total number of reviews generated to date is over 5 million while the number of searchable products across the network is over 4 million. All the seven national sites in the network generate over 26.5 monthly unique visitors.

Ciao was initially launched in 1999 and Greenfield only acquired the shopping network in 2005 for $154 million. I highly doubt that over the last 3 years Greenfield invested any significant amount in the Ciao network so I believe it must be quite an appealing acquisition price for Greenfield.

For Microsoft the purchase is said to be aimed at increasing Microsoft’s European presence in commercial search by integrating the technology behind Ciao into Live Search platform. The idea is to push Microsoft Live Search to the top position among search engines helping users find, compare and buy products and services online. This is another proof of the fact that Microsoft has extensive plans for the search engine and it will also be interesting to see if Microsoft will also apply its recently introduced approach to producing better search results for users based on their search history to commercial search and how it will influence the advertising landscape.

But what is really interesting to me is that I have found a press release on the Ciao press page dated June 17, 2008 stating that Greenfield enters an agreement to be acquired by private investment firm Quadrangle Group LLC. In June the price the investment firm was supposed to pay equaled approximately $426 million (at $15.5 per share while Microsoft will now pay $17.5 per share). Earlier this week (on Tuesday) Greenfield Online announced that it had received a superior offer and was going to terminate the agreement with Quadrangle. I have no first-hand information on why this transaction has not been completed and why the company stayed independent to be sold to Microsoft only a little over 2 months later at a price increased by $60 million. I can imagine Microsoft advisors noticed the announcement of the deal and came up with a higher price once they saw a value in this shopping-related search for the Redmond-based corporation. This is nothing but a guess of mine but it may show that it is wise to announce all the planned acquisitions as loud as possible to get a chance of receiving a higher bid.