Omniture Inc., a provider of web analytics technology, said today it plans to pay $6.5 million in cash, plus the assumption of debt, for the site search-and-navigation and online merchandising platform of Mercado, a company that has raised more than $65 million in capital in recent years.
Calls to Mercado today were not returned, and it could not be determined if the company will remain in existence after the deal. Four of the six venture capital firms that have invested in Mercado are based in Israel, and regulators in that country will have to approve the deal, which Omniture expects will close by the end of the year.
Mercado’s headquarters is in Pleasanton, CA, and the company operates facilities in Paris, the London suburb of Maidenhead and Herzliya, Israel. Mercado recently laid off a large number of its more than 100 employees, according to sources close to the company.
Omniture has indicated it plans to acquire the intellectual property and business assets required to fully support the Mercado site search-and-navigation and online merchandising platform. Omniture and Mercado have already integrated their technology platforms in Omniture’s SiteCatalyst application, which extends web analytics to monitor and analyze how web users employ site search applications.
Josh James, CEO and co-founder of Omniture, says current economic conditions presented an unusual opportunity to acquire at a low price technology from Mercado that would help Omniture extend its reach into online merchandising. “The macro environment has created a great opportunity for us to acquire assets that we have been interested in for some time at a great value for our stockholders,” he says.
Mercado’s client base includes the online operations of Macy’s, OfficeMax, REI, Overstock.com, Cymax Stores, MajesticWine.com and LookFantastic.com.
Aaron Rubin, CEO of OnlineRetailer.com, which operates several niche retail e-commerce sites including KarateDepot.com and ScrubsGallery.com, says he chose Mercado “because of their superior focus, flexibility and quality of their programmers and technical staff. It’s important that Omniture maintains these three things with the Mercado unit as they are Mercado’s biggest asset.”
Like other e-commerce technology providers, however, Mercado appears to have run into a financial crunch caused by current economic conditions and tight credit markets combined with its on-demand software-as-a-service business model, says Bill Mirabito, a former retailer who now helps merchants evaluate e-commerce technology as founder and principal analyst of consultants B2C Partners. Vendors selling access to software on demand receive monthly subscription fees, whereas traditional software vendors are paid a larger lump sum when they sell their software. Mirabito adds that pressures on other providers of on-demand e-commerce technology are starting to force them to increase prices.
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