Seeking Alpha
Research analyst
Profile| Send Message|
( followers)

Amid all the speculation that Yahoo (NASDAQ:YHOO) would sell itself (or not), the search engine operator swung to the other side of the table on Tuesday, announcing the $270m all-cash purchase of interclick (ICLK). The planned acquisition, which is expected to close early next year, is the first time Yahoo has reached for a fellow public company in more than eight years.

Yahoo has picked up more than 45 privately held companies and one Bulletin Board-listed company since it acquired Overture Services in 2003 for $1.6bn, its largest-ever acquisition. (Another interesting side note on the interclick deal: Boutique advisory firm GCA Savvian has now advised the past two companies that Yahoo has acquired.)

And in its purchase of interclick, Yahoo is getting a relative bargain, at least on one key measure. (Interclick only generates a few million dollars of cash flow each year, so calculating an EBITDA multiple doesn’t make much sense.) At a $270m equity value, interclick is valued at roughly two times projected 2011 revenue. Even with the takeout premium, that’s less than half of Yahoo’s corresponding valuation. The search engine operator currently garners an equity value of about $19bn, or 4.2 times projected sales of $4.5bn this year.

Source: Yahoo Hunted, But Still In The Hunt