Xing May Be In Talks To Acquire Plaxo
We are hearing a LOT of chatter about a possible Xing-Plaxo merger in the $250 million range. The deal makes some sense - newly public Xing is headquartered in Germany and hasn't gotten much traction in the U.S. where it competes directly with LinkedIn.
Context & Ripple Effects
TechCrunch reports chatter — unconfirmed, and framed as rumor — that newly public German business network [[a:Xing|Xing]] is in talks to buy contact-management firm Plaxo for around $250 million. The strategic logic given: Xing competes head-on with LinkedIn but has gotten little U.S. traction, and Plaxo would be an American user base and address-book footprint bought rather than built.
The target market is not neutral ground. By late 2006 LinkedIn had already been positioned as the 'MySpace for grown-ups' reaching its tipping point among professionals, and in February 2007 founder Reid Hoffman stepped down as chief executive — so any acquirer entering the U.S. professional-networking space in mid-2007 is buying share against an entrenched, freshly reorganized leader, not an open field.
First-order effects
- If the rumored ~$250 million deal closes, Xing converts its post-IPO currency into an instant U.S. presence via Plaxo's contacts-and-sync base, while Plaxo's backers get an exit through a European public company rather than a U.S. buyer.
Second-order effects
- LinkedIn — two months past Hoffman handing off the CEO role — faces a rival whose U.S. deficit is suddenly addressed by acquisition, pressuring it to respond on product or deal-making of its own; other potential Plaxo suitors would have to move quickly or price up if talks leak further.
Third-order effects
- A confirmed deal would mark professional networking as a market consolidating through cross-border M&A, where regional champions spend IPO proceeds to buy geographic reach instead of growing organically — raising the bar for any standalone social-software firm to remain independent.
The trend: Professional networking in 2007 is consolidating through acquisition-led expansion, with public regional players like Xing using their stock to buy the U.S. beachheads they failed to win organically.