Greenfield Ditches Quadrangle, Merges with Microsoft in $468M Deal

8/29/08Follow @wroush

Wilton, CT-based Greenfield Online (NASDAQ: SRVY), which owns a network of Internet-based consumer survey and comparison shopping sites, announced a complex sequence of changes today. The company is backing out of a previously announced merger with New York-based Quadrangle Group. Simultaneously, it’s selling its Internet survey business to an as-yet-unnamed buyer from the financial services industry. And biggest of all, it has agreed to sell the remaining parts of its business—consisting principally of Ciao, an online comparison shopping service popular in Europe—to Redmond, WA-based Microsoft for $468 million, some $42 million more than Quadrangle had offered.

Founded in 1994, Greenfield Online has nearly 800 employees and raised $58 million in a 2004 IPO. It acquired Ciao in 2005 as part of a buying spree that also brought in OpinionSurveys.com, Rapidata.net, and Zing Wireless. Ciao runs a classic comparison-shopping site—with localized versions in Germany, France, Spain, Italy, the United Kingdom, the Netherlands, Sweden, and the United States—that offers price comparisons, product specifications, and consumer reviews for more than 4 million products. The company earns money on click-through advertising and commissions on referred purchases.

Tami Reller, corproate vice president and CFO for Windows and online services at Microsoft, said in an announcement that acquiring Ciao would “further extend Microsoft’s search and e-commerce services in Europe,” where the company already runs localized versions of its MSN and Microsoft Live Search portals. “The team at Ciao has built a passionate consumer community based on intuitive technology and extensive merchant relationships that we believe will deliver incremental benefit to the Microsoft Live Search platform,” Reller said.

The sale to Quadrangle had been valued at $426 million, but Greenfield said in an announcement Tuesday that it had received a superior offer from a “Fortune 100 strategic buyer,” which turns out to be Microsoft. Under the previous merger agreement, Quadrangle had three days to make a counter-offer—which, apparently, it did not. Greenfield will now have to pay Quadrangle a $5 million termination fee.

Microsoft was apparently uninterested in Greenfield’s original core business—its Internet Survey Solutions division, or ISS, which recruits paid panels of consumers who respond to surveys commissioned by consumer products companies. The software giant was involved in finding an outside buyer for that part of the company, according to Reller. “We are pleased we could find the right strategic partner for ISS to continue its growth,” she said.

One of Greenfield’s investors, Connecticut-based Mesco Ltd, is also an investor in uTest, a software quality assurance outsourcing house we profiled last week. Utest executives said they wanted to work with Mesco because of its familiarity with businesses that gather feedback online.

Wade Roush is Xconomy's chief correspondent and editor of Xconomy San Francisco. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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