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Yahoo to buy Kelkoo for €475M

Search and content company moves into e-commercial world

Yahoo is scooping up European online price-comparison shopping service Kelkoo in a move aimed at boosting the Internet giant's e-commerce and search-related marketing services in Europe.

The Californian company has agreed to acquire up to 100 percent of Kelkoo's share capital for €475 million (£317 million) in cash, it said Friday. The deal is subject to customary closing conditions but due to be completed by the second quarter of 2004.

Kelkoo is one of the largest e-commerce services in Europe, with operations in nine countries, reaching 10 percent of all European Internet users, according to Yahoo. The service allows consumers to find products in some 25 categories through its search engine, then compare prices among thousands of merchants. Kelkoo operates its own network of branded sites, and powers shopping platforms for other networks as well as maintaining an affiliate distribution network.

"People are increasingly comparing prices when they go online and Kelkoo has emerged as a major European player," said Olivier Beauvillain, a Paris-based analyst with Jupiter Research.

Along with Kelkoo's strength, Yahoo plans to leverage its own search technology and the commercial search capabilities that it acquired through its purchase of Overture Services Inc. to take advantage of the growth of online comparison shopping. The company said that researching products has become the second-most popular online activity in Europe after e-mail.

Yahoo may also integrate Kelkoo's technology into the shopping and search channels of its portal in the USA and Asia as well as Europe, according to Beauvillain.

"The Kelkoo buy is another way for Yahoo to move away from being a pure portal venture," Beauvillain said.

Search and commerce-related services have become a priority for Yahoo, and it has invested heavily recently to strengthen itself in these markets. In July of last year it announced that it was buying paid search service provider Overture for $1.63 billion, and the company has since invested in its own search technology, allowing it to shed services from search leader Google Inc. What's more, with its new comparison shopping capabilities, Yahoo will be in a better position to compete with Google's comparison service Froogle, Beauvillain said.

The company has also recently launched a paid inclusion search program, which it says will increase the size and relevancy of its index.

By acquiring Kelkoo Yahoo hopes to further tap into the European market while strengthening its position as a global brand. Kelkoo was founded in France in 1999 and has since merged with companies in Spain, the U.K., Norway and France, Yahoo said. The property now claims over 32 million unique users monthly and has been profitable since the fourth quarter of 2002.

Following completion of the acquisition, Kelkoo will operate as a subsidiary of Yahoo, and will continue to be headed by its chief executive officer Pierre Chappaz, Yahoo said. Yahoo said that it does not expect a reduction in Kelkoo's workforce.


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