RealTime IT News

Wedding Bells for DealTime, Epinions

In a marriage that almost makes one ask why the vows weren't said sooner, online shopping search company DealTime is acquiring consumer review and ratings company Epinions.

Both companies are privately held, so financial details weren't disclosed, but the synergies seem obvious and the companies said that each will add complementary content and online shopping search tools to the other's sites.

DealTime will integrate Epinions' consumer reviews and ratings across its network. Shoppers will also be able to access DealTime's 2,100 merchant partners on Epinions.com.

Dan Ciporin, chairman and CEO of New York City-based DealTime, said that the California offices of Epinions will remain open and Epinions CEO Nirav Tolia will become chief operating officer of DealTime once the acquisition closes.

"I'm pretty positive on the acquisition," said Rob Leathern, an analyst at Jupiter Research. "DealTime has robust shopping search technology, and Epinions has a good consumer-value proposition. I think it makes a lot of sense for them to be together."

Both companies say they are profitable. DealTime, launched in 1999, reported record revenues of more than $11 million for the fourth quarter of 2002 and said it was profitable on a GAAP basis for the second half of the year.

Tolia said Brisbane, Calif.-based Epinions, whose revenue model "is exactly the same as DealTime's," was profitable for all of 2002 on a GAAP basis. "This (Epinions) is a healthy company from a balance sheet perspective," he told internetnews.com.

"The strategic rationale for the deal is simple - consumers and merchants want a single shopping solution... we are putting together two complementary things (and) by virtue of bringing both halves together, all of the sites will be improved," Tolia said. "And both companies currently have large unduplicated user bases."

"We are bringing together two best of breed solutions - a uniquely valuable content platform together with our proven shopping search tools and technologies," Ciporin said. And as a result, "we will be in a dead heat with Microsoft's MSN.Shopping as the fourth largest shopping site on the Web behind Amazon , eBay and Yahoo! Shopping ."

DealTime is a privately held company, venture-backed by partners including Bertelsmann, AOL Time Warner, Bank of America, Bain Capital and Singapore Telecom. Epinions charter investors and board members, Bill Gurley of Benchmark Capital and John Johnston of August Capital, would join the board of the newly merged company.

Both companies are paid by merchants for shopper referrals.

"Consumer-written reviews are very helpful in pre-qualifying shoppers," said Safa Rashtchy, Senior Research Analyst with U.S. Bancorp Piper Jaffray. "Epinions' consumer reviews and ratings combined with DealTime's shopping search technologies should translate into a powerful product for consumers and merchants alike. Generally, these types of pre-qualified buyers are the most attractive leads in the online marketplace."

Asked about any IPO plans, Ciporin said only that "we are focused on building out a great company, and if we do that by putting these two companies together, I think there will be a lot of options in front of us..."