Mergers, Acquisitions and Financial Results

Global internet auction company has bought 22% of Jump Internet Technologies, the brains behind the local online shopping comparison website, Jump Shopping. The size of the deal was not disclosed, but bidorbuy had an option to take a majority stake in the business within three years if it was happy with its investment, said Jump MD Albert Bredenhann.

Until this week, he and co-founder Jaco Roux were the sole shareholders in Jump, which is SA's largest online shopping aggregator. The deal with bidorbuy took a month to negotiate and trumped two offers by local investors. "We were looking for investors and bidorbuy offered more money for less," said Bredenhann. "Organic growth just doesn't happen fast enough. We need to speed up to get market share and take Jump to where it belongs."

Jump has been self-funded so far, and all the cash from bidorbuy will go directly into building up the business. The website works by letting users search for goods and compare the prices offered by competing online traders. Once a user clicks through to the trader's website, Jump earns a commission of R1 whether the customer makes a purchase or not. So far all but one of the stores has repeatedly bought more of those click-through credits from Jump.

Although the website lists about 600 stores, only 70 have joined the merchant programme where all their products are listed in Jump's catalogue to be searchable by consumers. "I want to reach 100% as soon as possible," said Bredenhann.

"We needed the money so we can employ people to help us. This is more than enough to keep us going and bidorbuy can become a majority shareholder if we prove that the first investment was worth it."

In June 2005, eBay bought the comparison shopping site for $620m in cash, and the previous year Yahoo! bought a European version, Kelkoo, for €475m.

"We do exactly the same as they do," said Bredenhann. At the moment it does it on a far smaller scale, with Jump attracting 202000 visitors last month.

The deal was helped by Andy Higgins, the MD of bidorbuy's South African subsidiary. His company aimed to enhance online buying by making it easier, safer and more convenient, and Jump Shopping complemented that, he said.

Business Day