Friendster to sell for $100 million

Posted Dec 5th 2009 3:40PM by Tom Johansmeyer
Filed under: Internet, Google (GOOG), China, Morgan Stanley (MS), Media World, Technology

Does anyone remember Friendster? For about ten minutes seven years ago, it was the hottest thing in social networking. The site that effectively kicked off the social media movement didn't stay in vogue long, however, eventually riding a wave of user referrals to Asia. Meanwhile, MySpace, Facebook and Twitter came along, taking over the sector -- and the hype that comes with it.

Well, Friendster is worth something to somebody, it seems. The company is due to be sold at the end of the month for $100 million. The social networking service is tops in Asia, which is where more than half of its 100 million-strong user base can be found.

The transaction is more than 50% below the estimated $210 million valuation determined by TechCrunch over the summer, but this gap is but a rounding error compared to the sky-high valuations assigned to the top companies in the business, with Twitter estimated to be worth more than $1 billion (though this is certainly disputed), LinkedIn at $1.25 billion and Facebook possibly above $10 billion.

Morgan Stanley (MS) is advising Friendster on the deal, according to Richard Kimber, the CEO. "We have a shortlist at this point that we are negotiating with," he told Reuters.

While the buyer has not been disclosed, Facebook is said to have been on the short list but was turned down because of competition and intellectual property considerations. Tencent Holdings, the biggest internet company in China by market value (at $35 billion) was on the short list as well. Six years ago, Friendster turned down a $30 million buyout offer from Google (GOOG).

Talk of an acquisition comes as Friendster redesigns and relaunches its service.