GUS caught up with the vogue for buying online comparison shopping websites yesterday, splashing out $485m (£273m) on PriceGrabber.com less than 24 hours after demerging its remaining stake in Burberry.
Its biggest deal on behalf of its Experian financial services arm bolsters the division ahead of its expected separation from Argos Retail Group in 2006. Analysts said the acquisition would boost GUS's earnings next year. GUS, which has been working on its own break-up plans for the past 18 months, has spent more than $1bn on expanding Experian this year. Its shares rallied 8.5p to 992p.
Don Robert, who heads Experian, said buying the privately owned PriceGrabber broadened its appeal to consumers seeking web-based advice on how to spend their money. It follows Experian's purchase of lowermybills.com, which helps people shop around for cheaper mortgages.
Like its rivals, Shopping.com and Shopzilla.com, PriceGrabber allows consumers to compare the cost of goods at retailers before parting with their cash. It also runs comparison shopping on more than 200 other websites, including Ask Jeeves and MSN.
PriceGrabber.com is the third internet shopping comparison site to change hands this year - and third-biggest - but Mr Robert denied he had settled for third best. "We have been courting them for two years," he said, adding that PriceGrabber's margins were double those of its bigger rivals.
Yesterday's deal pitches Experian up against the giants of the dot.com world. Ebay, which bought the number one price-checking site, Shopping.com, in the summer for $620m, will pose stiff competition. And although late to the game, Google's Froogle and Yahoo! Shopping are doing a good job of playing catch-up. Shopzilla, the second-biggest comparison site, also has a new owner in EW Scripps, a Cincinnati-based newspaper group.
PriceGrabber, based in Westwood, Los Angeles, has 140 employees, who all shared in yesterday's payout. However, the bulk of the $485m windfall will be split between Kamran Pourzanjani, the chief executive and co-founder of PriceGrabber, and 29 other employees, friends and family members. The 45-year-old Iranian-born American started the online price checking site in 1999.
PriceGrabber expects to make $25m profit this year on $60m of sales. The online shopping comparison market is growing at 40 per cent per year and PriceGrabber at 50 per cent, Mr Robert said. Experian expects "significant" synergies from swapping data and customer traffic between its different internet businesses.
GUS is funding the acquisition, plus expenses, from existing bank facilities.Reuse content