India’s most popular consumer internet portal and third-largest web portal, Rediff.com is buzzing with activity. After the news of its Indian listing, there are reports that it is a potential acquisition target and the suitors could be among Google, Yahoo, AOL and even MSN.
The talks are gaining momentum as gauged from the company’s surging stock price in NASDAQ, and if the deal goes through, it may be valued at around $1 billlion.
With the increasing broadband penetration, and rebound in global internet business, consolidation among larger players makes economic sense. In a recent research, Rediff was found to be second most preferred online shopping site after ebay but above Google and Yahoo.
Though US investment magazine, Barrons has reported that Rediff shares are overpriced as its market capitalisation is more than 13 times the entire Indian online advertising market, from which the majority of its revenues are earned.
Also, with increasing presence of these international portals, Rediff’s market share is sure to witness a drop and to expand their business rapidly, a buyout of Rediff would be a natural choice for them. via