Yahoo!7 has acquired Australian group buying site Spreets in a deal worth around $40m.
Yahoo!7 boss Rohan Lund said: “The group buying space has been exploding in the last six months. Spreets was the first.”
The site was co founded by Dean McEvoy and Justus Hammer. Although the exact terms of the deal have not been revealed, Mumbrella understands that the payment by Yahoo!7, which beat competition from other potential purchasers, was all up front.
The deal was signed last night and announced at a press conference this morning.
Spreets was only launched in February last year with revenues of just $4,000 in its first month. This month it will see $4m in revenue and now has 52 staff.
The way that Spreets – and other group buying sites in the competitive space – operate is by working with retailers to offer users a heavily discounted deal. The retailer shares a slice of the revenue with the group buying site.
The best known site globally is Group On which turned down a reported $6bn purchase offer from Google.
McEvoy says that his decision to launch came while he was in the US looking for investors in his restaurant reservation site Booking Angel and saw the fledglign Group On. He said: “I realised that was the silver bullet that local businesses need to get new customers.”
The group buying space is becoming increasingly competitive including the NineMSN-owned Cudo, Jump On It, Living Social, Scoopon and Our Deal. News Ltd has an indirect investment in Our Deal through its part ownership of digital investment company Netus which partly owns the site. ten is also an investor in Our Deal.
Groupon has been unable to launch in Australia because the groupon.com.au domain was bought by Scoopon with a legal battle in the offing. Instead it has launched Star Deals.
Lund said that one attraction for Yahoo!7 was that it was a new type of online revenue stream for the company. He said: “This is a fair price which helps us diversify for display and search.”
McEvoy said that one reason for selling to Yahoo!7 was that the company planned to invest in speeding up the growth of Spreets which is already in Sydney, Melbourne, Brisbane, SAdelaide, Perth, Canberra, Wellington, Christchurch and Auckland.