The transaction sees Seattle-based Amazon.com get the worldwide leading marketplace for used, rare and out-of-print books and access to an inventory of more than 110 million books. Makes sense considering Amazon.com’s trademarked “Earth’s Biggest Selection” claim. On the other side of the deal, AbeBooks gets access to Amazon’s resources (financial and technical) and will be able to continue growing their business at breakneck speed. Of course, a well-deserved exit for shareholders and employees is nice as well – some of which have been involved with AbeBooks for over ten years.
Financial details of the transaction haven’t been released but based on my calculations this was a sizable transaction. According to the AbeBooks website, in 2007 they did $190 Million in gross merchandise volume and had 13,500 bookseller members on their platform. Based on AbeBooks’ 13.5% combined commission/service fee and minimum monthly subscription fee of $25, AbeBooks’ revenue in 2007 was approximately $30 Million.
If you look at comparable online e-commerce businesses like eBay with a current market cap of $32 Billion and 2007 annual revenue of $7.6 Billion, it’s safe to say that a revenue multiple of 3-4 would be applicable for AbeBooks. This would put the acquisition price of AbeBooks somewhere in the range of $90-$120 Million. That’s Big!
If my math skills haven’t failed me, this acquisition will take the #2 spot on the Biggest Consumer Internet Transactions in Canada list, behind Disney’s acquisition of Club Penguin ($700 Million) and ahead of Yahoo!’s purchase of Flickr for a rumoured $35 Million.
Important side note: AbeBooks head office will remain in Victoria, BC and the current management team stays put. Congrats to everyone at AbeBooks – gotta love employee share ownership programs!
Disclosure: Boris Wertz is a Director of Techvibes Media Inc. and AbeBooks.