SocialBeat’s Dean Takahashi reports that Digital Sky Technologies (DST) has agreed to pay AOL $187.5 million for ICQ, the largest instant messaging service in Russia, and a number of other markets. According to Time Warner, ICQ has over 100 million accounts registered, and more than 32 million unique visitors per month, which was started in 1996 by Israeli firm Mirabilis, which AOL acquired for $407 million back in 1998.
While DST for a long time has been an owner in Eastern block countries of significant social media assets, more recently they have become known as a secondary investor in companies like Facebook, Zynga, Groupon and Tencent. Yuri Milner, CEO of DST, said “the acquisition of ICQ is a strategic enhancement of our business in Russia and Eastern Europe.”
So does this acquisition of ICQ position them as a competitor, or better yet – frenemy, to their existing or future social media investments? Although DST has been an owner operator largely in the Eastern block countries, and it now appears they have more global aspirations, so it will be interesting to see how the market reacts to DST in future investment opportunities.
In a BusinessWeek interview in February 2010, Yuri Milner says “I am making big investments… You just have to be personally involved.” He goes on to say, “I’d like to see DST as a significant global investment company in the Internet arena.”
As we understand it, DST hasn’t taken board seats in their late stage deals at companies such as Facebook and Zynga, but its hard to believe that their hundreds of millions of dollars of investment hasn’t yielded them with a wealth of confidential information that Facebook, Zynga and others wouldn’t want their competitor to get a hold of. And now DST could just be that competitor?
Sure, Facebook and others probably aren’t worried about ICQ as a competitor, but DST has certainly proven that they have access to nearly unlimited capital and they’re willing to pay a premium or above, so what’s next on their acquisition horizon and how much are they willing to pay? Were they paying premiums in these companies for a strategic reason we didn’t quite see at the time? Is this something their current or future portfolio companies should be worried about? Did Mark Zuckerberg miss the writing on the wall? Tell us what you think.