E.W. Scripps Co. has agreed to agreed to pay $525 million in cash for Shopzilla Inc., a comparison-shopping website that takes the media company into the search business.
Under the agreement announced this week, Shopzilla shareholders also will receive Shopzilla's net working capital at the time of closing, which is expected to be about $35 million. The transaction is expected to be completed early in the third quarter, pending regulatory approval.
Los Angeles-based Shopzilla is expected to become a standalone operating unit of Scripps, headquartered in Cincinnati. Founded in 1996 as BizRate.com, privately held Shopzilla aggregates products and displays search results according to shoppers' preferences. The company searches more than 30 million products from 55,000 retailers.
BizRate.com was re-branded Shopzilla in November 2004, and was re-launched as Shopzilla's customer ratings service. Shoppers find and contribute reviews on products and retailers.
For the full year of 2005, Shopzilla is expected to generate profits from $30 million to $33 million on revenues of $130 million to $140 million. Most of the company's revenues come from retailers, which pay when a shopper clicks on their links. Shopzilla also powers shopping search for other sites, including America Online, Lycos and Time Warner's RoadRunner.
Kenneth W. Lowe, president and chief executive of Scripps, said Shopzilla was a "significant Internet play" for the company.
"As more consumers become aware of this service, we're betting that Shopzilla will become the way that people shop online," Lowe said in a statement.
Chuck Davis, president and chief executive of Shopzilla, is expected to stay with the company after its acquisition, along with co-founders Farhad Mohit, chief product officer; and Henri Asseily, chief technology officer.