The year 2023 isn’t even half over, but Meta’s unloading of Giphy could rank as the fire sale of the year.
The parent company of Facebook has agreed to sell the platform of animated images to Shutterstock for $53 million in cash. That’s just 20% of what it paid for Giphy just three years ago.
The low price was hardly Meta’s preference, of course. The social media giant was forced to unload the company after a ruling from the U.K.’s antitrust authority, the Competition and Markets Authority (CMA), that Meta’s takeover of Giphy would harm competition. (That ruling was first issued in November of 2021, but only became final seven months ago, after appeals had been exhausted.)
Meta, reportedly, had until the end of June to complete the sale, which put it at a severe disadvantage when negotiating a price. The company opted to complete the takeover of Giphy before regulators had ruled, putting it in a difficult (and somewhat awkward) position when the CMA announced its decision.
A $262 million loss is nothing to sneeze at, of course, but it’s essentially a drop in the bucket for Meta, whose cash on hand for the calendar quarter of this year was $37.4 billion, while revenues hit $28.65 billion.
By any other measure, though, it’s a lot. Allow us to try to put it into perspective.
- It’s roughly equivalent to the current market cap of Land’s End.
- For that amount, Meta could buy Lending Tree—and still have a couple million left over.
- It’s more than twice the market cap of Bed Bath & Beyond.
- It’s 32 times more than Meta paid for the fb.com domain.
- It’s around 10 times what the company paid in 2018 to acquire Bloomsbury AI.
- It’s a bit shy of the amount ChatGPT creator OpenAI reportedly just raised in a share sale, moving that company’s valuation to between $27 and $29 billion.
The ruling forcing the sale might have been aimed at Meta, but it’s a safe bet it didn’t go unnoticed by Microsoft and Activision. While the proposed merger of those two companies is a much different deal, the CMA has been the chief obstacle to date, refusing to approve the merger for fear of its long-term impact on competitiveness in the video game space.
The companies are in the midst of appealing that ruling, but in forcing the sale of Giphy, the CMA is seemingly sending a signal that it’s not going to let tech deals clear the regulatory-approval process without some notable concessions.
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