Internet venture capital firm CMGI (Nasdaq: CMGI) announced today that it will pay approximately $407 million (US$) for auction site uBid.com (Nasdaq: UBID) in a stock deal that will lodge the network squarely in the highly competitive online auction industry.
“Online auctions, both business-to-consumer and business-to-business, are one of the fastest-growing areas of the Internet,” said CMGI CEO David Wetherell. “We believe there’s tremendous opportunity in applying uBid.com’s techniques to CMGI’s existing e-commerce companies, and in building aggressively to extend these technologies into the emerging B2B marketplace through licensing and other channels.”
The Chicago, Illinois-based uBid allows qualified suppliers to list items on the site and takes a commission on the sale of the items. It auctions off a rotating selection of computers, consumer electronics, art, travel, jewelry and more.
Founded in 1997
uBid was founded in 1997 by parent Creative Computers, Inc., a direct marketer of PCs. It had fourth quarter revenues of $69.9 million and a net loss of $11.5 million.
The Andover, Massachusetts-based CMGI, a network of 60 Internet companies that encompasses pure-play e-commerce, portals, advertising, marketing, business-to-business, entertainment, and more, said it will leverage its network to drive traffic to the site and increase exposure.
Enhancing the Portfolio
CMGI has taken minority stakes in online auction businesses BizBuyer.com and AuctionWatch, but this acquisition will be its first majority-owned venture in the field.
CMGI is also picking up Ironmall, an auction site for used construction equipment that was launched earlier this month by uBid and Cahners, a business information provider. Forrester Research estimates that the online construction equipment industry could reach $28 billion by 2003.
However, what uBid currently does best is offer up a rotating carousel of products at prices that it says are up to 70 percent lower than the normal retail price. The company recently topped the one million mark in registered users and says it has auctioned off 1.7 million items in its two-year online existence.
UBid, which raised $25 million in an IPO in December 1998, recently launched a site in Australia with an Australian partner and is planning another for New Zealand later this year. The company has left open the possibility of joint venture launches in Asia.