U.S. Court Rules Against Bazaarvoice's $168.2 Mln Acquisition Of PowerReviews

(RTTNews) - Social software company Bazaarvoice Inc. (BV) announced that On Thursday the U.S. District Court in the Northern District of California ruled in favor of the Department of Justice or "DOJ" in its antitrust action challenging Bazaarvoice's $168.2 million acquisition of PowerReviews.

The U.S. District Judge William Orrick III reportedly ruled Bazaarvoice's acquisition of PowerReviews Inc. unlawfully threatened competition in the market for Internet services that retailers use to collect and display online product reviews written by consumers. Bazaarvoice violated antitrust law "by purchasing its closest and only serious competitor, creating the likelihood of an anticompetitive effect."

The Court has scheduled a hearing for January 22, 2014 to begin remedy proceedings.

Meanwhile, Bazaarvoice said that it will not make a decision regarding an appeal until after the Court concludes the remedy phase of the litigation.

"We are disappointed in the outcome of the litigation. We believe that the merger with PowerReviews has been beneficial to customers, as did the more than 100 customers who testified that they did not believe that the acquisition affected them adversely in any way," said Gene Austin, president of Bazaarvoice.

"Throughout this process, our focus has remained on serving our clients and providing them with a full range of social software that helps them engage more powerfully with their customers. With the Court's decision, we'll now do everything we can to help ensure that the final order achieves the best outcome for our clients, shareholders, and employees," said Gene Austin.

In January 2013, The Department of Justice has said it filed a civil antitrust lawsuit against Bazaarvoice Inc. challenging the company's June 2012 acquisition of PowerReviews Inc. The department had said that the $168.2 million transaction substantially lessened competition in the market for product ratings and reviews platforms in the United States, resulting in higher prices and diminished innovation.

In May 2012, Bazaarvoice announced it entered into a definitive agreement to acquire privately-held PowerReviews, Inc. Under the terms of the agreement, Bazaarvoice would pay up to approximately $31.0 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.

In June 2012, Bazaarvoice, announced that it has completed its acquisition of PowerReviews, Inc., paying approximately $31 million in cash and issuing approximately 6.4 million shares of common stock of Bazaarvoice as part of the transaction and assuming vested and unvested options to purchase the shares of common stock of PowerReviews equivalent to 1.6 million options to purchase the shares of common stock of Bazaarvoice.

At the closing share price on June 12, 2012, the value of the transaction was $168.2 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.

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 large retail companies, such as Gap, REI, Staples and Toys 'R' Us.

BV closed Thursday's trading at $8.25, up $0.20 or 2.48%.