Price Comparison Website Falls to Ebay's $620m Bid

EBay has agreed a $620m deal (£340m) to buy Shopping.com, as part of an effort to offset slowing growth in its core business of online auctions.

The deal is eBay's largest acquisition since it paid $1.5bn for the online payment firm PayPal in 2002.

Shopping.com is a price comparison website, allowing users to hunt down the cheapest prices for whatever they are trying to buy. EBay hopes that by merging the listings on its online marketplace with the product listings on Shopping.com, it will drive further traffic toward its sites.

It may also go some way to mollify eBay's army of sellers, who have complained bitterly about a recent increase in listing fees. Shopping.com had 14.6m unique users in April according to market researcher Nielsen/NetRatings.

Bill Cobb, head of eBay North America, told the Wall Street Journal that sellers would be introduced to a new pool of potential buyers because of the deal. "This is about continuing to fuel our biggest business," he said.

Revenues in America and Germany, eBay's two biggest money-spinners, have been slowing as the market begins to mature. Revenue growth in the US during the first quarter slowed to 20%, down from 40% in the same period a year earlier.

In January, the company unnerved investors when it missed Wall Street forecasts for its fourth-quarter results for the first time since it became a public company. In April it reported first-quarter earnings of $256m, up 28%, which appeared to calm Wall Street's worst fears, but the shares are down by a third since the beginning of the year.

EBay is paying $21 a share in cash for Shopping.com, a 20% premium. Founded in 1998, Shopping.com resisted the lure of the stock market during the boom years and finally floated in New York last October at $18 a share. The price peaked at $32 later that month and has since been falling back.

It earned $12m on revenues of less than $100m last year. The service is free to usersbut charges retailers for referring shoppers to their websites. It has operations in the US, Britain and France.

EBay has also been investing heavily to develop its American model of online auction sites around the world. It has made a string of acquisitions as well as building some sites from scratch.

Shopping.com could also attract a different type of buyer and seller to eBay, traditionally focused on used or difficult-to-find items.