Public Tech Companies Continue to Buy Social Media Start-Ups
Social media companies seem to be the current popular trend in technology. Social networking giant Facebook (NASDAQ: FB) went public in May, in one of the largest initial offerings in U.S. history. Underwriters valued the company at over $100 billion, which is larger than tech bellwether Cisco Systems (NASDAQ: CSCO), which is valued at only $90 billion.
There were reports Thursday morning on Bloomberg, stating that Microsoft (NASDAQ: MSFT) may be interested in acquiring social media company Yammer. Dubbed the "enterprise social network," Yammer is a tool that empowers employees to be more productive and successful by enabling them to collaborate easily, make smarter decisions faster, and self-organize into teams to take on any business challenge.
According to people familiar with the matter, Microsoft could pay over $1 billion. Microsoft has been desperately looking for the next big thing - especially in the social media realm - and Yammer could help the stagnant tech giant.
This would be yet another acquisition in a long line of recent social media purchases. Below are several recent social media acquisitions within the publicly-traded landscape.
salesforce.com Acquires Buddy Media
On June 4th, cloud computing company salesforce.com (NYSE: CRM) announced that it entered into a definitive agreement to acquire Buddy Media. The Buddy Media is a social marketing platform that allows customers to publish content, place and optimize social advertising, and measure the effectiveness of social media marketing programs.
The acquisition was for approximately $689 million payable in cash and salesforce.com equity. The transaction is expected to be completed during salesforce.com's fiscal third quarter ending October 31, 2012, and is subject to customary closing conditions.
Oracle Acquires Virtue
On May 23, 2012, Oracle (NASDAQ: ORCL) announced that it entered into an agreement to acquire Vitrue, a cloud-based social marketing and engagement platform that enables marketers to centrally create, publish, moderate, manage, measure and report on their social marketing campaigns.
The transaction is expected to close in the summer of 2012 and until the transaction closes, Oracle and Vitrue will continue to operate independently, and it is business as usual.
Facebook Acquires Instagram
Back on April 9th before Facebook was even publicly traded, the social networking giant reached an agreement to acquire Instagram, a popular photo-sharing app for mobile devices like Apple's (NASDAQ: AAPL) iPhone.
Facebook acquired Instagram for approximately $1 billion in a combination of cash and shares of Facebook. The transaction, which is subject to customary closing conditions, is expected to close later this quarter.
Zynga Acquires OMGPOP
Social gaming company Zynga (NASDAQ: ZNGA) announced that it had acquired New York-based social game developer OMGPOP, on March 21st. OMGPOP is known for its popular mobile game Draw Something.
Zynga stated OMGPOP will focus on building new mobile IP and strengthening its existing portfolio of fun and creative social games.
Investing in the Social Media Craze
A Silicon Valley-based investment firm, GSV Capital (NASDAQ: GSVC), is known for holding shares of popular start-up companies.
It is hard for the everyday investor to gain access to these companies, so buying shares of GSVC is a way to get exposure. The GSVC fund utilizes private marketplaces like SharesPost and SecondMarket to acquire shares in companies that GSVC's management feels have the greatest potential. Most of the fund's holdings are social media, mobile computing, cloud, software as a service, green tech, and education-based.
Benzinga has spoken to GSV Capital's Chairman and CEO, Michael Moe, in the past on the recent Facebook IPO debacle. GSV Capital owned pre-IPO shares of Facebook, and continues to hold them for the long-term.
Another social media giant, Twitter, is GSVC's single largest holding. The fund has a $30 million position in Twitter, and Moe has said that the fund would consider acquiring more at the right price.
A file hosting service, Dropbox, is another private company that makes up a meaningful share of GSV Capital's overall holdings.
GSV Capital could provide a buying opportunity for investors looking to get into the social media craze, especially if this excitement remains high in the coming years. Twitter is likely to be the next company held by GSV Capital to go public, but other interesting names include Chegg and TrueCar.
Of course, shares of GSVC traded sharply lower in the weeks following Facebook's IPO. If other tech IPOs prove to be equally as disappointing, GSVC could see further downside.
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