Canstar’s RateCity deal ticks comparison boxes

Canstar CEO Andrew Spicer and RateCity CEO Paul Marshall. Picture: Supplied.

Movement in the comparison market is continuing apace as another player has joined the Canstar stable after the buyout three days ago of RateCity.

The deal closely follows on the heels of the international buyout of fellow comparison market player Mozo by a British listed media company in February.

The Canstar family is set to grow on the back of its acquisition of fellow comparison site player RateCity.

RateCity’s relationship with Canstar was already close, with 50 per cent of the business already owned by the main shareholders behind Canstar.

Andrew Willink, who founded both Canstar and RateCity, owns the business alongside his wife and Canstar Chair Annabelle Chaplain and their nephew Lachlan Given and business partner Phillip Cohen.

The deal sees Nine Entertainment sell up its 50 per cent shareholding in RateCity, which it gained after going halves with seed funding for the site years ago. Nine had first taken its shareholding through a deal with Nine MSN.

The move by Nine to sell up its RateCity holding marks a continuation of the strategy by the media business to exit its non-controlling shareholding relationships.

The deal has been in the works since late last year as Canstar made moves at RateCity.

Several suitors have come calling to knock on the door at RateCity to see if shareholders were interested in selling up but none have been able to unite the interests of Nine Entertainment and the four shareholders from Canstar’s side of the comparison fence.

The deal was sealed by the delivery of the RateCity sign from its office in North Sydney to Canstar headquarters in Brisbane.

RateCity CEO Paul Marshall checked the massive oversized sign into his luggage for the flight before delivering it to the desk of Canstar’s Andrew Spicer.

Mr Marshall will join the Canstar executive team and will remain CEO of RateCity.

The move is unlikely to change anything at either RateCity or Canstar for the moment, with no staff cuts on the cards, although the potential for some efficiencies has been flagged.

In celebration of the deal and capitalising on the proximity of the company’s office to North Sydney’s dining scene Mr Marshall took RateCity’s team out to YumCha after breaking the news on Tuesday morning.

The dollar sum size of the deal is unknown, but current revenues and customer sizes at Canstar and RateCity hint to the deal. Canstar is believed to have booked about $40m in revenue last year on the back of its deals and search traffic.

RateCity for its part is thought to have pulled in almost $10m in revenue.

Canstar receives about 2m visitors to its site each month, with the acquisition of RateCity set to add another 400,000.

The move may catapult the combined comparison group to the top of the comparison charts, above similar players Finder, Mozo, or iSelect.

Both businesses deliver profits after tax, having done so for some time now, but each refused to be drawn on their magnitude.

But senior figures behind each business noted the potential profitability of the businesses could boom thanks to extra funding from Canstar to RateCity.

The deal could also bring forward moves by Canstar to list, which have been floated after recent musings by Finder.

Fellow comparison site Finder recently made headlines after its CEO Fred Schebesta suggested in April it was looking to list.

The deal follows recent news about Mozo, which was snapped up by British listed media company Future Plc in February.