M&A News: eBay Buys GSI Commerce, Salesforce Picks Up Radian6

By Damian Thompson No, CSI is not developing a third offshoot of its show to feature Commerce, California. And no David Caruso isn't taking his “talents” away from South Beach. It is GSI not CSI, as eBay (EBAY) purchased GSI Commerce this week in its second-largest acquisition ever and Salesforce (CRM) continues its 2011 buying spree with Radian6. eBay Buys GSI Commerce GSI In an attempt to attract more users to its online markets, eBay (EBAY) is purchasing e-commerce marketing services company GSI Commerce for approximately $2.4 billion. That puts the value of the acquisition just below the $2.6 billion paid for Skype in 2008 and well above the $1.5 billion paid for PayPal in 2002. “We intend to lead the next generation of commerce innovation. The acquisition of GSI, which offers the most comprehensive integrated suite of online commerce and interactive marketing services available, will significantly strengthen our ability to connect buyers and sellers worldwide,” eBay CEO John Donahoe said in a release. “Combined with eBay Marketplaces and PayPal, we believe GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes.” (To check out John Townsend's piece on the current up-leg in gold pricing, click here.) The reasoning behind the deal is to broaden eBay into a full service e-commerce company that can attempt to rival the current bully on the block, Amazon.com (AMZN). So what does the widely unknown GSI do? Essentially it partners with companies such as American Eagle (AEO), Hewlett-Packard (HPQ), Ralph Lauren (RL), and so forth, to provide its online back-end in technology, fulfillment, marketing, and client services. It also owns its own Web properties such as flash-sale retailer Rue La La and free shipping Web retailer Shop Runner. eBay is aggressively looking for additional revenue streams as the auction business isn't what it used to be with specialist Web retailers and free sites such as craigslist biting into that historically profitable arena. As far as M&A history goes, it has had great success with the PayPal acquisition, but could do nothing with online-communications giant Skype, being forced to divest that business with no gain after a few years. (To read Howard Simons' article on sector performance, click here.) The GSI purchase is a very smart move if eBay can pull off a successful merger, never an easy task. Deal Deets: eBay offered GSI shareholders $1.96 billion in cash, or $29.25 a share, a 51 percent premium to GSI's closing share price on Friday. eBay is also lending $467 million to a holding company run by GSI chief executive Michael Rubin. Salesforce Acquires Radian6 Salesforce, the pioneer of Software as a Service and cloud computing, has continued its aggressive expansion by acquiring social media monitoring platform Radian6. “With Radian6, salesforce.com is gaining the technology and market leader in social media monitoring,” according to chairman and CEO of Salesforce Marc Benioff. Radian6 helps companies monitor the most popularly used social networks such as Facebook, LinkedIn, Twitter, YouTube, etc. This monitoring allows companies to gain customer and prospect insights in real-time and to engage in social media conversations. Radian6 has a large existing client roster including Dell (DELL), GE (GE), Kodak (EK) and UPS (UPS). This is the third significant acquisition in recent months by Salesforce, which acquired Ruby cloud platform Heroku for $212 million, contact management startup Etacts for an undisclosed amount, and Web conferencing service Dimdim for $31 million. It was also a participant in the latest $32 million round of investment for small business marketing firm HubSpot. (To check out Andrew Jeffrey's analysis on the housing market, click here.) Salesforce believes that the acquisition of the company will enhance all of its products, including Sales Cloud, Service Cloud, Chatter and Force.com. By adding in social media monitoring and engagement tools, it should help Salesforce clients to better market and sell their own products and offerings, as well as assist Salesforce itself in selling more subscriptions. This is another savvy investment by Salesforce, as it further expands its existing tools as well as makes it the most significant player in a new market that is quickly heating up. Deal Deets: Salesforce acquires Radian6 for approximately $276 million in cash and $50 million in stock, net of cash. In addition, approximately $10 million in stock and $4 million in cash will be issued to Radian6′s founders (subject to vesting conditions over two years). The deal is expected to close by July 31. To read the rest, head on over to Minyanville.