Digital River, Inc. (DRIV) recently announced that it will acquire less than a 15% stake in privately-held Softonic for $26 million.
Barcelona-based Softonic is a leading download site and market leader in software downloads in Europe and Latin America, offering thousands of software titles for Windows, Macintosh (personal computers designed by Apple Inc. (AAPL) and mobile phones.
Digital River’s final stake in the company will be determined based on Softonic’s future financial performance. Meanwhile, Softonic will maintain its independence and organizational structure.
With this acquisition, Digital River will become the exclusive third-party e-commerce provider for digital software titles available on the Softonic site. By working as Softonic’s e-commerce partner and marketing its software catalog through their website, Digital River expects to expand its footprint in the European markets.
Digital River is currently on the lookout for new business in order to maintain its top-line once its prime customer Symantec departs. This acquisition is a step in that direction.
Symantec had earlier stated that it would not renew its existing e-commerce agreement with Digital River beyond June 30, 2010, on the expiry of its existing contract. Symantec stated that it would move all of the online traffic currently outsourced to Digital River to an internally developed Symantec e-commerce system before the current contract expires. Management continues to work on its business plans in response to Symantec’s decision to not renew its e-commerce contract.
However, it remains to be seen how the company carves its growth path sans Symantec, which has been contributing more than 30% to the top-line (directly or indirectly).
Digital River is also diversifying its software business into complementary markets, which include consumer electronics and games. Digital River plans to invest in new technologies to unlock opportunities in horizontal markets such as subscriptions and business-to-business software markets.
Headquartered in Minneapolis, MN, Digital River provides e-commerce solutions for software publishers and retailers worldwide. The company delivers software and other digital goods online to over 40,000 customers.
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