Only a few days ago, Google was deep in discussions with Digg, regarding a possible acquisition of the site. It is believed that the term sheet stage had already been cleared. However, sometime last week, Google decided not to go ahead with the deal, and Digg was notified accordingly.
The two firms were in an advanced stage of negotiations, and the price being quoted was in the range of $200 million.
Google was looking into the technical and financial aspects of Digg. Michael Arrington from TechCrunch explains that usually, by this stage the buyer knows pretty well what they are getting into, but since there is no firm commitment even at the term sheet stage, it is always possible to walk out for any reason.
No official reason has been given for calling off the deal at this late stage of discussions, but one undisclosed source says that it was due to some technical glitch, that the deal did not materialize, while another source reports that there were differences of perspective and ideology between the two companies, that led to the break down of talks.
It is possible, according to Arnold Zafra at Search Engine Journal, that Google just realised that this deal may not really help them to generate more revenue, which would obviously be their bottom line.
Whatever the reason may be, it looks as though Digg has been ditched at the last minute, yet again, and this might make it difficult for them to find a new buyer, as most companies would wonder what the problem was. Digg are supposedly looking to Allen & Co. to help them get some new financing for now.
In what seems like more than just a coincidence, Google started testing a Digg-like voting system for its own organic search results just last week. One might almost wonder – even though it obviously would not be the case – could Google have just freely borrowed ideas from Digg and then walked away once they got what they needed?