Digging for a Deal

December 18th, 2007 | Categories: acquisitions, blogs, financing, marketing, networks, off topic, strategy

Digg logoSocial news site Digg is up for sale. VentureBeat first reported the story, claiming a reliable source confirmed the company’s plans. The source goes on to say that Digg has hired Allen & Company, a private investment firm, to help broker a potential deal. The asking price is said to be in the range of $300 million.

The story really comes as no surprise to the blogosphere. Speculation about an acquisition has been swirling for months. The difference this time is that Digg is actively seeking an acquisitor, rather than fielding potential offers. This new tactic seems a bit desperate to me.

What is the company’s motivation to sell? Is traffic slowing down? Is Digg worried about the threat of new entrants and/or current competitors? Are revenues bleak at best? My guess is that Adelson and Rose figure the company is at its peak, both in terms of popularity and dominance. If that is the case, then Digg, in theory, should be able to negotiate the highest possible valuation. Having said that though, shopping around seems to put the acquisitor in a position of bargaining power.

I love Digg and I hope it sticks around for a long time. I also think it’s a great consumer-oriented, media play for any large company looking to make a mark in the space. What is currently happening behind the scenes is beyond me. But as I say, I think Adelson and Rose may be looking for a change. The world of venture capital may be awaiting. What about new start-ups? Oh yeah… then there’s Pownce

One Comment

  1. Rudy Says:

    Maybe Digg is no longer a labor of love. Get out, while they can, with the most loot.

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