Kara Swisher

Recent Posts by Kara Swisher

The Bids Are In for AOL's Sale of ICQ–It's Down to a "U.N." of Four Buyers

AOL has taken another step closer to selling off its ICQ instant messaging service, culling seven bids to four “serious” ones, said sources close to the situation.

The price for the service is hovering just under $200 million, several sources said, with one bid higher.

An AOL spokeswoman declined to comment.

BoomTown reported news of the sale of ICQ by AOL (AOL) in November, part of a deleveraging of units from the newly independent Internet company as it focuses more on its content and advertising business.

While other reports a month later said the sale was closer to completion than it actually was, the process is proceeding in a more traditional manner, with bidders making proposals to AOL’s investment bankers, Allen & Co. and Morgan Stanley (MS).

Sources said that the solicitation of bids is now over and that there are four “serious” ones, which one person close to the situation described as a “U.N. of buyers.”

Translation: The bidders are likelier to be international Internet companies rather than from the U.S.

That’s because ICQ–which has 40 to 50 million active users across the globe–has a stronger overseas business, especially in Germany, Russia, Eastern Europe and Israel.

While I could not get the exact names of those left in the running, the most obvious possibilities include:

Russian investment group Digital Sky Technologies, which has invested in both Facebook and social gaming site Zynga; China’s huge Tencent-owned QQ instant messaging and gaming service; Naspers, a multimedia giant known as the MIH Group and based in South Africa; Seznam, the largest Web portal in the Czech Republic; and, perhaps, Yandex, Russia’s leading search engine.


In the U.S., some felt Google (GOOG) would be a bidder for ICQ, though it was Yahoo (YHOO) that apparently made a much lower offer, which took it out of the running.

In any case, the price will likely be much lower than what AOL paid in 1998.

The then-powerful AOL acquired ICQ, which was one of the most explosive online communications tools, for $287 million, with another $120 million in earnouts for the team. It was part of a Tel Aviv, Israel, start-up called Mirabilis.

But ICQ’s popularity in the U.S. lagged compared with rival services from Microsoft (MSFT), Yahoo and Google. In addition, Facebook and Twitter have become major players in the status-update space.

AOL’s AIM service, in contrast, is quite strong, typically clocking in as one of the top instant messaging properties.

ICQ is still based in Israel with about 100 employees and is moderately profitable. Bidders, sources said, are now talking with the ICQ team as part of the process.

Latest Video

View all videos »

Search »

Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work