M&A Alert - July 23, 2009
Yahoo Agrees to Acquire Xoopit
Transaction Overview
 On July 23, 2009, Yahoo (NASDAQ: YHOO) announced that it has agreed to purchase Xoopit for approximately $20mm.
Target Description
Xoopit’s product allows Yahoo Mail and Gmail users to discover, share and manage photographs, video applications and documents that quickly accumulate in a user’s inbox. To date, Xoopit has raised $6.5mm from Accel Partners, Foundation Capital, and several angel investors.
Buyer Description
Yahoo! Inc. (NASDAQ: YHOO) provides Internet services to users, advertisers and developers. Products include personalized webpage via My Yahoo!, online communities including Yahoo! Mail, Yahoo! 360, Yahoo! Messenger and Flickr, search ads via Yahoo! Search, media services via Yahoo! News and online connectivity services including Yahoo! Mobile and Yahoo! Digital Home.
Xoopit is pre-revenue and has 10 employees.
Strategic Rationale
Xoopit is all about allowing Yahoo! Mail users to easily discover, share and manage photographs that quickly buried and become forgotten in most users’ email box. Xoopit brings a logical extension of Yahoo! Mail’s capabilities to its 300mm plus users and will also likely fit well with Yahoo!’s photo site, Flickr over time.
Architect Partners’ Observations
This transaction nicely illustrates an important fact that is fundamental and critically important to keep in mind. Most M&A transactions are between two parties who have gotten to know each other already. Xoopit won “Best Overall Award” at Yahoo! Open Hack Day in September 2008 and were integrating into the Yahoo! Mail client in December 2008 and was Yahoo! Mail’s most popular third-party application.