Yahoo! goes shopping for Kelkoo with €475m

Yahoo! is ramping up its European presence with an online shopping spree – splashing out €475m for price comparison website Kelkoo, it announced today.

The acquisition has been agreed and will take the form of a cash buyout to be concluded in the second quarter of the year, when Kelkoo will officially become a subsidiary of the portal. No job losses are predicted.

The new acquisition will boost Yahoo!'s online shopping offering and open up new revenue streams through Kelkoo's lead referral scheme and other marketing initiatives. Kelkoo operates in nine countries across Europe and reaches nearly 10 per cent of internet users in the continent, offering price comparisons on electrical goods, CDs, books and cars.

It's a tasty proposition for the portal, with online shopping now marked out as the second most popular internet activity after emailing in Europe and a market worth set to be worth around €40bn this year, according to Forrester Research.

Pierre Chappaz, CEO and founder of Kelkoo, told silicon.com that the Kelkoo brand will still be promoted as an online shopping search but some of the services will be integrated into Yahoo!'s search.

As well as its foray into online shopping, Yahoo! also bought the search company Overture for over £1bn and dumped Google as its main search provider, prompting discussion of a war with the online giant, which has its own product comparison service, Froogle.

John Marcom, senior VP of international operations for Yahoo!, said that the two big-hitting acquisitions would work well together. "Kelkoo has specific expertise in helping marketers find shoppers; Overture helps consumers find a product. This is a golden opportunity to grow both revenue schemes and to work with clients who want to develop both sides."

Olivier Beauvillain, analyst at Jupiter Research, said the acquisition marks a departure for the portal. "It's in line with Yahoo!'s other activities – like the buyout of Overture – and it shows that Yahoo! is moving away from its original media product line with banner advertising and so on. It's now in direct competition with Google – on the Yahoo! portal search is marketed like it is on Google. Two to three years ago, search and shopping were hidden away inside the portal."

Marcom, however, said that Yahoo! had a strategy of following advertising trends. "Yahoo! has always reacted to the advertising opportunities available on the internet and in the last few years, we've seen shopping emerge and... the advertising landscape shift."

What does the future hold for Yahoo!? Beauvillain said he wouldn't be surprised to see more targeted acquisitions to strengthen Yahoo!'s position in Europe but Marcom told silicon.com he couldn't possibly comment.