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Barclaycard swoops on ShopSmart.com

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ShopSmart.com, the UK shopping comparison service, has been sold to Barclaycard for the knockdown price of £2million-ish, in cash and shares.

Barclaycard is to integrate the service into Indigo Square, Barclaycard's online shopping mall (yes shopping malls still exist). ShopSmart shareholders will hold 10 per cent of Indigo Square following the deal.

But however you dress it sale price represents a massive loss for shareholders, including Durlacher (the investment bank with the Reverse Midas Touch), which are said by the FT to have pumped in £19m into the company.

What a fall from the heady days of last year. Last August, five months after dotcom share prices hit their peak, the company's valuation was estimated at between £200m- and £300m, according to analysts canvassed at the time by FT. What are these analysts doing now?

Such a valuation was never realistic for ShopSmart, considering it sold 22.5 per cent of its equity in August to AOL and Wal-Mart for - nothing! Companies do not give away £40-60 million of equity in return for a distribution deal or two, if they think the shares are really worth that much.

The high-point for shopping comparison engine valuations was $700m for My Simon, bought by CNET in 1999.

Shopping bots, such as ShopSmart, Dealtime and Kelkoo are supposed to be one of the big Internet category killers. Their popularity is in little doubt, but how long it will take to translate this into retail brand-killing, money print machines, is open to question. ®

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