Friday, December 11, 2009

MOL Buys Friendster

Wow! What a deal ... but maybe 5 years too late??!! At a time where everybody is Facebooking or migrating to Facebook, it is hard to see real long term values in having Friendster.

WSJ: Vincent Tan reached a deal to acquire Friendster Inc., a social-networking site that retains a big following in South Asia but has been eclipsed globally by rivals such as Facebook Inc. and MySpace. Tan is buying 100% of Friendster, which is based in Mountain View, Calif., through his online-payments business, MOL Global Pte. Ltd., which is based in Malaysia.

Financial terms of the deal weren't disclosed. MOL is buying Friendster from a group of investors including venture capital firms Kleiner Perkins Caufield & Byers, Benchmark Capital, DAG Ventures and IDG Ventures.

Friendster, whose site launched in 2003, blazed a trail for social networking—the idea of connecting with other Internet users via Web profiles. But as the company struggled with performance issues, many users ditched it in favor of newer alternatives.

Friendster said more than 75 million of its 115 million registered users are in Asia and more than 90% of its daily traffic comes from the region. It is especially popular in Malaysia, the Philippines and Indonesia. But over the past year sites such as Facebook and MySpace have surpassed Friendster in the Asian-Pacific region, according to data from research firm comScore. MySpace is owned by News Corp., which also owns The Wall Street Journal.

"The new combined entity gives Friendster the kind of financial backing, retail distribution, and e-commerce infrastructure that will enable us to accelerate our strategy and create a locally relevant, fun experience for our users in Asia, both on and offline," said Friendster Chief Executive Richard Kimber in a prepared statement.

MOL's principal shareholder is Mr. Tan, who is chairman and chief executive of Berjaya Corp., a diversified Malaysian conglomerate. Attempts to reach a representative for Berjaya were unsuccessful.

A former insurance-company employee, Mr. Tan has built his business empire since the 1980s, when he won the right to operate the McDonald's franchise in Malaysia. He became close to then-Prime Minister Mahathir Mohamad and branched out into gambling, tourism, property and telecommunications.

Today, Berjaya has annual revenue of $1.8 billion and its interests include Starbucks and 7-Eleven franchises, a local English-language newspaper and major property developments.

MOL, which handles 60 million payment transactions a year, plans to merge its operations with Friendster to create an Asia-wide content, distribution and commerce network. MOL provides systems to collect payments for content and services, such as online games and music, movies and video.

"We are creating a unique company that will be well positioned to provide content to a huge, regional user base, here in Southeast Asia," said Ganesh Kumar Bangah, chief executive of MOL in a statement.

Mr. Bangah will become the group chief executive of the combined entity while Mr. Kimber will become the nonexecutive chairman.

Nor Badron, a spokesman at Friendster, said the company will continue to maintain its headquarters in the U.S. "There is currently no plan to move Friendster's headquarters to Malaysia. We will continue to operate at all our existing offices," he said.

Friendster currently has sales offices in Malaysia, the Philippines and Singapore.

p/s photos: Anjori Alagh

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