YP Corp. to Acquire Livedeal Inc. for $12M

My friend Mat just sent me this news regarding the acquisition of LiveDeal.com by YP Corp., the owner of YP.com.

Under the terms of the acquisition, LiveDeal shareholders received 15,968,514 shares of YP common stock. LiveDeal will remain an independent entity and a wholly owned subsidiary of YP and the two companies will leverage one anothers content, sales teams and technology to strengthen their individual product offerings. YP plans to use LiveDeals innovative technology platform to converge its four principal marketing channels directories, mobile services, classifieds and advertising/distribution networks into a first-of-itskind, hyper-local marketing solution for businesses and consumers.

After listening to the analyst call, here are additional nuggets of information:

  • They want to become “eBay without the auction”
  • They claim they will be the “first player to fuse classifieds and YP online” (which is not true as most international directory players, like Yellow Pages Group, who have acquired classifieds companies in the past have integrated both together already)
  • Livedeal Inc.’s revenues have grown 300% in the last two years and will reach $5M this year. Breakeven will also be attained this year and current burn rate is $100K per month. Its gross margin is 85%.
  • Livedeal currently has 1M unique visitors
  • Livedeal.com’s will become YP.com’s technology platform.
  • Investors in LiveDeal Inc. will now own 11.5% of YP Corp.
  • LiveDeal’s business model: running newspaper publishers’ classifieds and directory section and sharing revenues with them. The Philadelphia Enquirer, The Toronto Star and Montreal’s La Presse are all customers.

What it means: like my friend Greg, that’s certainly a deal I was not expecting. I’ve said for a few years that directory and classifieds are a natural fit together and I think that acquisition signals more consolidation in the marketplace. For example, Oodle is likely to be acquired by a newspaper publisher this year. As for YP Corp, it looks like they are morphing into a platform play. Hopefully, their past legal troubles won’t impair their ability to sell to large media companies.

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