Huge business news today as it’s confirmed that Yahoo! will be buying Tumblr in a $1.1 billion all-cash transaction. Making acquisitions has been key to Yahoo!’s strategy forever, under a whole range of executives, but this is an unusually rich purchase. However, it doesn’t come close to matching the big pickups of the dotcom era. These are the top-ten richest acquisitions the company has ever made, in inflation-adjusted terms:
- Broacast.com $7.6 billion, 1999
- Geocities $4.9 billion, 1999.
- Overture Services $2.06 billion, 2003.
- Tumblr $1.1 billion, 2013.
- Right Media $750 million, 2007.
- Kelkoo $696 million, 2004.
- eGroups $568 million, 2000.
- Hotjobs $554 million, 2002.
- Zimbra $386 million, 2007
- Blue Lithium $333 million, 2007.
Looking back at this list, the criticism that jumps out isn’t anything in particular about the companies Yahoo! has chosen to buy. It’s more that they seem to have a relatively poor sense of timing. The majority of these have the look of “buy high” to them, coming in the middle of the economy-wide M&A waves. What you’d want to see a cash-rich company do is go bargain hunting during downturns. I’d have to think harder about whether buying Tumblr makes any real sense, but I will say that overall market conditions are much more favorable to buying just about anything in 2013 than they were in 1999. The creditworthy can get money very cheaply these days, so spending a lot of money on something makes sense.