Bargain basement could reshape web landscape

 

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By Reuters

Posted on 6 Dec 2008 at 08:56

Many international brands in the technology and media sector could be swallowed up by rivals next year as aggressive dealmakers seek mergers and takeovers on the back of bargain basement valuations.

And with tight credit markets making it tough for many companies to borrow money for acquisitions, executives expect more creative deals, such as share swaps between distressed companies without a lot of cash.

Barry Diller, chief executive of media conglomerate IAC, says he is building a US$2.2bn (£1.5bn) stockpile of cash and could swoop on a "cascade of acquisition opportunities" in the media and entertainment sectors next year.

"I don't think now is the time to buy frankly anything unless you desperately need it," Diller says, noting that valuations will only get lower in coming months as the economy worsens.

Chris DeWolfe, co-founder and CEO of social network site MySpace is equally aggressive, pointing out that start-ups valued at between US$200 million and US$300 million just six months ago are now willing to sell themselves for as little as a tenth of that value.

With venture capital funding for start-ups expected to dwindle if the global economy worsens, DeWolfe expects valuations to get even cheaper, creating more deal opportunities.