Microsoft to Buy Greenfield, Then Sell Survey Arm

Greenfield Online has revealed the identity of its new potential buyer - Microsoft. Having offered $486m to clinch the deal, the software giant intends to sell Greenfield's online survey arm and just keep the Ciao comparison shopping web sites.

On Tuesday, Greenfield announced its intention to terminate its existing $15.50 per share merger agreement with investment firm Quadrangle unless the latter increased its offer by today. Microsoft has now stepped in with a $60m increase, which it is funding through a cash offer of $17.50 per share. Quadrangle will receive a $5m break fee from Greenfield as compensation for missing out on the deal.

Ciao was founded in 1999 and was acquired by Greenfield in 2005. It operates in the UK, Germany, France, Italy, Spain, the Netherlands and Sweden, and competes with Yahoo-owned Kelkoo, e-Bay's Shopping.com, Experian's PriceGrabber and Google Product Search.

For Q2, Greenfield's revenues were $36.0m, of which the surveys unit contributed $24.6m while the Ciao division brought in $11.4m. However, revenue for the comparison shopping segment was up more than 50% on the year while the surveys division grew a more modest 5.4% - the former has been growing faster for some time.

Microsoft VP John Mangelaars said that integrating Ciao's capabilities into Microsoft's Life Search will provide a 'strong launchpad' for its commercial search offer in Europe and enhance its e-commerce offering on MSN.

'Acquiring one of Europe's leading price comparison, shopping and consumer reviews sites will further extend Microsoft's search and e-commerce services in Europe,' added Tami Reller, CFO for Windows and Online services at Microsoft.

The likely buyer of Greenfield's research arm is said to be a financial rather than a trade buyer, but apart from this no information has yet been released. Both deals are expected to close during the fourth quarter of 2008.

Commenting on the announcement, Greenfield CEO and President Albert Angrisani said: 'We're proud of the community that we have helped to establish, and we're looking forward to exploring the new opportunities, technologies and relationships that Microsoft and the Live Search platform can unlock.'

Yesterday, Greenfield shares closed up 0.1% at $17.25.

Web sites: www.microsoft.com and www.greenfield.com .

In February, Microsoft acquired Israeli behavioural targeting technology firm YaData, which produces tools to automatically identify and target specific customer groups according to their web browsing profiles and interests.