Yahoo Buys European Shopping Search Engine Kelkoo

Yahoo bolstered its shopping search capabilities Friday, announcing a planned acquisition of leading European comparison-shopping engine Kelkoo for about $575 million.

The deal would augment Yahoo's search services while giving it quick access to European businesses. Paris-based Kelkoo has operations in 10 European countries, displaying listings for 3 million products from 2,500 merchants. It lets users search for an item, compare prices and click to the merchant to make a purchase. Merchants pay Kelkoo each time a user clicks on one of their listings.

Under the cash deal expected to close in the second quarter, Yahoo will pay Kelkoo shareholders 475 million euros. Kelkoo has been profitable since fourth-quarter 2002, and there are no plans to cut any of Kelkoo's 250 employees, Yahoo said.

The Kelkoo deal continues Yahoo's strategy of investing heavily in search-related technology. In a little more than 18 months, it has spent more than $2.5 billion to acquire Kelkoo, algorithmic search technology through Inktomi and paid listings from Overture Services.

The merging of e-commerce and search is expected to continue. Yahoo recast its Yahoo Shopping section as a comparison-shopping search engine in September, using Inktomi. The move took direct aim at comparison sites like, BizRate and PriceGrabber. Google also has a shopping search engine, Froogle, which is in test mode. last week filed for a $75 million initial public offering, as it tries to maintain its position as No. 2 in the U.S. market behind Yahoo Shopping.

Kelkoo operates its own sites in its 10 European markets in addition to distribution deals on major portals including MSN across Europe.

Along with generating revenue through merchant listings, shopping search engines have proven ripe vehicles for paid listings like those provided by Yahoo's Overture unit. In its IPO filing, revealed that 38 percent of its $67.2 million in 2003 sales came through Google paid listings at the bottom of its search results. The company's turn to profitability dates to August 2002, when it struck its deal with Google.

Kelkoo carries paid listings from Google's AdSense program through a deal struck in January. The terms of that deal were not disclosed.

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