Fresh from their $625 million acquisition of Postini, it appears that Google isn't content to rest on its laurels, as reports on Monday suggest that the company, along with Yahoo!, is eyeing Indian web portal operator Rediff.com as its next purchase.According to premier Indian newspaper, Hindustan Times, the rumoured takeover has been revealed by investment banking sources who claim that Google and Yahoo! have been in talks with Rediff.com. Rediff.com is India's third-largest web portal and provides users with news, entertainment, shopping, search and other services.
Leading US-based investment journal Barrons reported this month that Rediff.com is seeing speculation that it could be a takeover target. Rediff's stock has witnessed a sharp jump in share price and volume on Nasdaq over the past week, when it also launched a website to help consumers upload voice, video and photographic content for free. India has seen recent growth in both telephone penetration and the internet in urban areas.
The report quoted Gilford Securities as saying Rediff could fetch in excess of $25 per share in a sale, which could tempt other suitors besides Google and Yahoo!. Other likely suitors include the Time-Warner owned America On Line and Microsoft's MSN - both of whom already enjoy a strong presence in India.
However, the report also claims that shares in Rediff.com are overpriced and that there were serious doubts about Rediff's valuation based on its market capitalization and the size of its potential market. Some estimates show Rediff's market capitalization to be more than 13 times the entire Indian online advertising market, where the majority of the company's revenues are accrued. Furthermore, traffic data from Comscore suggests that traffic to Rediff.com has decreased as both Google and Yahoo! gain a foothold in the Indian internet marketplace.
Rediff.com assert the story is based on the Barrons report, which claims neither Google nor Yahoo! are in talks specifically with the Indian company and has moved quickly to quash rumours of any impending takeover. According to a Rediff.com spokesperson, no-one from the Hindustan Times has been in contact with the company and the article is baseless.
The report follows a story aired on TV, which claimed that a team headed by Rediff.com CFO Joy Basu were evaluating plans to list the company in the Indian markets, although company CEO Ajit Balakrishnan stated that no timeline had been decided for when to list, but that Rediff.com does not need the money.
