We’ve got more details on the Friendster acquisition announced last week. Rumors were floating that the buyer, MOL Global, paid as much as $100 million for Friendster. The real price, we’ve confirmed from multiple sources, was under $30 million. Just a few months ago, based on comparable valuations from Bebo, LinkedIn and Facebook (and taking into account Friendster’s largely Asian audience), Friendster was worth between $98 million and $273 million.
The total purchase price paid was $39.5 million. But lots of stuff was deducted, totalling $13 million and change:
- $3.7 million in secured debt
- $2.5 million in cash in Friendster’s bank account
- $2.1 million paid to Friendster CEO Richard Kimber
- $1.4 million to other Frienster executives
- $3.4 million to Morgan Stanley and other third parties (lawyers, escrow agents, etc.)
The total to shareholders after the deductions? About $26.4 million. And $3.8 million of that is being put into escrow.
Some shareholders are surprised at the deal. It was just a little over a year ago that Friendster had $20 million in the bank on a fresh venture capital round. That’s when Kimber took over as CEO. Not only is the company worth little more than the money they had in the bank back then, but traffic has dropped from 34 million monthly uniques to just 18 million. Despite that, Kimber got a $2.1 million bonus.
Of course the real tragedy with Friendster is that they spurned Google’s $30 million buyout offer back in 2003. That was before Google went public, and the shares they would have received would be worth far, far more today. In fact, even if they got Google stock at the IPO price, a year later, those shares would be worth around $180 million today.
And here’s something that’s even worse – one source tells us that Friendster turned down a $150 million buyout offer last year, before Kimber was hired.