M&A Alert - June 25, 2010
eBay Acquires Mobile Comparison Pricing Application, RedLaser
Transaction Overview
On June 24 2010 eBay (NASDAQ:EBAY) announced that it has bought RedLaser and all related technology from Occipital LLC.
Target Description
RedLaser is an iPhone application that allows consumers to compare prices of products in-store with online prices. The user simply photographs the barcode label of the in-store product and RedLaser returns a listing of online prices. RedLaser was launched in May 2009 and has been downloaded 2 million times at a price of $1.99. Occipital LLC, the owner of RedLaser, was founded in 2008 by Jeffery Powers and Vikas Reddy with funding from TechStars. RedLaser, the product and underlying technology, is being acquired by eBay while Occipital LLC will continue as an independent company.
Buyer Description
eBay (NASDAQ:EBAY) is an e-commerce giant which initially built its business via online auctioning services. eBay has a large mobile commerce division which includes mobile applications such as eBay Marketplace, eBay Selling, StubHub and Shopping.com. In 2009 eBay had a mobile merchandise volume of $600mm and expects to generate $1.5b by 2010. The key executive sponsor in the deal was Mark Carges, CTO and SVP Global Products. The company was founded in 1995.
Transaction Parameters
Purchase price was not disclosed. Occipital LLC will continue to operate as a stand-alone company developing computer vision technology and products.
Strategic Rationale
eBay, at its heart, is an on-line retailer. RedLaser gives eBay something incredibly valuable:
- A PRESENCE in the in-store environment,
- at the MOMENT a purchase is being contemplated and
- the opportunity to TAKE OR FACILITATE that specific purchase.
Architect Partners’ Observations
This is one of the most strategic and potentially impactful M&A transactions we have ever seen. eBay brings a strong value proposition to the consumer by allowing them to check for best pricing, real-time when considering a purchase. That gives the consumer something they don’t easily have today, the ability to price negotiate with the retailer or purchase elsewhere. eBay benefits in a multitude of ways including:
- Forging a valuable relationship with the consumer,
- having an opportunity to directly sell the consumer that desired product
- acting as a gateway to that consumer for other on-line retailers (for a fee) to sell that product or
- offering other local merchants (for a fee) a chance to grab that purchase.
eBay immediately began offering RedLaser for free following the acquisition announcement.