M&A Alert - March 18, 2010
Yahoo! Buys Citizen Sports
Transaction Overview
On March 17th, 2010, Yahoo! (NASDAQ: YHOO) announced its intent to purchase Citizen Sports. The transaction is expected to close in the second quarter.
Target Description
Citizen Sports (previously known as ProTrade Sports) creates sports applications and social games that allow users to track sports scores, schedules, statistics and news as well as interact with friends on the iPhone and Android phones and social networking sites such as Facebook, MySpace and Hi5. Applications and games include Fantasy Football, Basket Challenge, Sportacular and Live Scores. The Company has a partnership with Sports Illustrated and competes with Yardbarker, SB Nation and Rotowire. Since being founded in 2004, Citizen Sports has received a total of $10 million in funding from Kleiner Perkins Caufield & Byers (Kevin Compton and Doug Mackenzie) and Radar Ventures. Other investors include major sports figures such as former Dallas Cowboys quarterback and three-time Super Bowl champ Troy Aikman, Arizona Diamondbacks General Partner Jeff Moorad, legendary NFL Hall of Fame coach Bill Walsh; and Northgate Capital Venture founder Brent Jones, the former all-pro San Francisco 49ers tight end.
Buyer Description
Yahoo! Inc. (NASDAQ: YHOO) provides Internet services to users, advertisers and developers. Products include online media services offered via sites such as Yahoo! News, Yahoo! Sports and Yahoo! Finance, online connectivity services including Yahoo! Mobile and Yahoo! Digital Home, online communities including Yahoo! Mail, Yahoo! 360, Yahoo! Messenger and Flickr, as well as search ads via Yahoo! Search. Yahoo! Sports claims 39mm monthly unique users in the U.S. and its Fantasy Baseball game was recently named Official Online Fantasy Game for Major League Baseball’s MLB.com. Bryan Lamkin, SVP of Consumer Product Group, was the key executive sponsor of the transaction.
Transaction Parameters
Although financial terms of the acquisition was not disclosed, AllThingsD’s Kara Swisher who had predicted the transaction estimated the transaction value between $40mm-$50mm.
Strategic Rationale
Yahoo! is acquiring Citizen Sports in an effort to augment its online content media services. Citizen Sports is a perfect complement to Yahoo! Sports, enhancing Yahoo! Sports as the top sports site that is available online, mobile and via social networking sites. And this deal moves the Yahoo! Sports brand further into the mobile and social networking businesses. Prior to this transaction, Yahoo had recently announced its intent to acquire content-focused (especially female-audience-centered), technology and analytics companies. This announcement is in line with Yahoo’s current restructuring strategy to become a leading online media content provider. Since Carol Bartz became Yahoo’s CEO early in 2009, Yahoo has made four acquisitions including Citizen Sports. Previous acquisitions include totaltravel.com (an online travel site company), maktoob.com (an Arabic online community) and Xoopit (an online photo storage/management service provider).
Architect Partners Observations
This transaction is well aligned with Yahoo’s overall firm strategy to be a leading online content provider. We believe online content is the primary driver of advertising and monetization opportunities. As Carol Bartz mentioned in a recent interview with Advertising Age, a high-quality audience-focused content is essential to offer a well-targeted advertising, as well as content-based monetization opportunities. We will continue be watching as Yahoo! progresses in its transformation.