Social software company Bazaarvoice has entered into a definitive agreement to acquire privately-held PowerReviews in a $151.9 million transaction. Founded in 2006, PowerReviews provides a social platform that includes ratings and reviews, Q&A, loyalty, discovery, and measurement capabilities. PowerReviews has built a client base of more than 1,100 retailers, primarily small and mid-size North American retailers, as well as retail companies, such as Gap, REI, Staples and Toys ‘R’ Us.
Under the terms of the agreement, Bazaarvoice will pay up to approximately $31 million in cash, issue up to approximately 6.4 million shares of common stock and assume vested and unvested options to purchase the common stock of PowerReviews equivalent to 1.6 million options to purchase the common stock of Bazaarvoice. At the closing share price on May 23, 2012, the value of the transaction is approximately $151.9 million, including the assumption of vested and unvested options but excluding the potential cash proceeds that may arise from the exercise of these assumed options. The transaction will be financed with cash on hand and is expected to close during the first fiscal quarter ending July 31, 2012 subject to customary closing conditions.
The acquisition will establish Bazaarvoice in the small to medium sized market and expands the Bazaarvoice network to over 1,800 clients globally, including nearly half of the Internet Retailer 500 companies.
Pursuant to the definitive agreement, Bazaarvoice will acquire PowerReviews through a reverse triangular merger. As a result of the merger, the stockholders of PowerReviews will receive up to approximately $31.0 million in cash and 6.4 million shares of Bazaarvoice common stock, and Bazaarvoice will assume options of PowerReviews that will be converted into the right to acquire upon exercise up to 1.6 million shares of Bazaarvoice common stock.
The definitive agreement contains customary representations and warranties and covenants of Bazaarvoice and PowerReviews, as well as indemnification obligations by the PowerReviews equityholders in the event of a breach of such representations, warranties, covenants and certain specified matters.
The completion of the acquisition is subject to certain conditions, and may be terminated by each of Bazaarvoice and PowerReviews under specified circumstances, including if the merger is not consummated by July 24, 2012.