An Offer Couldn't Refuse

Company sold to eBay for $620 million, eight years after humble beginnings in Netanya.

Dan Ciporin, who recently stepped down as CEO of (Nasdaq: SHOP) and took over as the online comparison shopping Web site's chairman, sounded highly pleased in the phone conversation from the United States. Eight years ago, the company was a small Internet company operating from offices above a schnitzel restaurant in Netanya's industrial zone: but yesterday morning, eBay announced acquisition of the company for $620 million, a premium of 20 percent above its market capitalization on Nasdaq.

eBay, which itself is worth a cool $53 billion, operates the world's largest online auctions Web site. Folding in a Web site where people can compare prices of objects sold online and read about customer satisfaction with products seems like a perfect fit.

Ciporin, an American who sounds wholly Israeli, always has firmly believed in's potential, but a takeover had never been on the cards. When waxing loquacious about the company's promise, Ciporin spoke mainly about comparison shopping from the home, and about the new Web site slated to launch by year-end in France. So when did eBay come into the picture?

"We thought we weren't for sale, but eBay contacted us about four months ago," Ciporin said. "We still insisted we weren't for sale, but agreed to meet with them to hear them out. Then the offer arrived, and we understood we couldn't refuse."

It made sense for both and its shareholders, he said. It was the way to stay at the top of the online comparison shopping world. was founded eight years ago by Amir Ashkenazi and Nahum Sharfman. Ciporin joined the company shortly after its establishment, specifically to push it toward the American market. Now their brainchild is growing up, he said, and has an opportunity to mature into something huge.

The $620 million transaction was closed within a month. Ciporin said eBay made it very clear that it badly wanted, thereby cutting through much of the normal negotiation process. Some talks and phone calls later - two weeks was all it needed, according to eBay's local representatives, the Yigal Arnon law firm - the price was agreed.

"eBay liked us because of the growth opportunities ahead of us," Ciporin said. "They are looking for ways to grow, and saw as a strategic acquisition." will remain an independent unit under the eBay umbrella, under the management of Lorrie Norrington. From the company's perspective, it's business as usual, Ciporin clarified.

Not for investors, though: will be delisted. Ciporin himself intends to take a vacation for a few months, after which he thinks he'll be back in an Internet business.

eBay is paying $21 per share in cash, a 20 percent premium over's $17.40 closing price on Nasdaq Wednesday night. The deal prices at a multiple of 4.7 times estimated revenues this year.

On Wednesday night,'s market capitalization was $517 million, which is 3.5 percent below the value at which it went public in October 2004. Its IPO sent shivers of excitement through the Internet world, partly thanks to Google's summer offering. In its first days, was a hit, rising to $32 within a month. But its star quickly faded, reducing its stock to just $12.50 in mid-May.

As always, news of the negotiations leaked out, though, and its stock rose 40 percent in the past two weeks. reported netting $3.9 million in the first quarter, an increase of 77 percent on the parallel. Revenues increased 38 percent, to $28.9 million. Most of its income derives from Google search ads appearing on the site, which generate income based on user entries to the advertisers' Web sites. Google and split the income.

For the sake of comparison,, which was founded in 1997 as Dealtime, made $6.6 million in revenues in 2000, posting a whopping net loss of $70.6 million, attributed mostly to its $41.2 million outlay on marketing and sales. The turnaround arrived in 2001, when the company slashed its work force and started concentrating on comparison shopping at the expense of advertising.

In its prior incarnation as Dealtime, was one of the first comparison shopping Web sites around, but it quickly found itself dealing with powerful competition, such as Google itself, which launched Froogle.

Not one to rest on its laurels, Dealtime merged with Epinions, a venue for online shoppers to tell others about their opinions of products.

Yesterday's deal will strengthen eBay in comparison shopping and critiques. It will also increase its surfer traffic: more than 400,000 shoppers use the Epinions site. employs 200 full-time staff and 110 part-timers. An eBay spokeswoman said there were no plans for any dramatic staff changes.