Yahoo Sells Kelkoo to PE Firm

Yahoo has sold its wholly owned subsidiary Paris-based comparative shopping site, Kelkoo – to a U.K.-based equity firm named Jamplant Limited, a new investment unit created by the founders of price comparison site USwitch, which sold to E.W. Scripps (SSP) for 210 million pounds in fiscal ’06. Kelkoo was sold for less than 100 million euros ($126 million), according to a TechCrunch report.

The Web Portal acquired the online comparison shopping service in March of 2004 for approx. 475 million euros ($579 million) as part of a push to bolster its European operations. However, as the internet giant started last year to re-evaluate its business under the return of Jerry Yang as chief executive ; it quickly reached the conclusion that Kelkoo had not lived up to expectations and progressed as expected, adding more pressure to Yahoo’s management to look at strategic alternatives for the comparative shopping site.

The sale of Kelkoo inflicts Yahoo a loss of at least 375 million euros (over $470 million). One thing worth pointing out is that Yahoo has never broken out revenue numbers for Kelkoo since the acquisition, but it is clear that the Web Portal itself, as a company in transition, failed to make headway in Europe against rivals Google (GOOG) and Microsoft (MSFT). Online shoppers, statistically, are much more likely to start their product search on Google than on any of the price comparison engines.

The founder and ex-CEO of Kelkoo Pierre Chappaz wrote about the deal on his blog (in French) where he directly blamed Yahoo’s incompetence in failing to grow the company in the world of transaction services. Mr. Chappaz also republished an internal email from Yahoo’s UK managing director Glen Drury, who is leading Kelkoo’s 270 employees.

Kelkoo was founded in France in November 1999, and helps online shoppers find the lowest prices for goods such as books, computer games, consumer electronics and fashion.

Prior to Yahoo’s acquisition Kelkoo had merged with or acquired several companies in the UK, Spain, Norway and France.