Yesmail, Others to Pick Up Netcentives Assets
Yesmail.com is slated to purchase Netcentives' e-mail marketing unit, following a Chapter 11 auction conducted last month.
The purchase is expected to close on Friday. Chicago-based yesmail.com, a unit of Internet holding company CMGI, declined to comment on the acquisition.
Sources close to yesmail, however, say the firm paid under $2 million for the unit, which employs about 80. How many of those will continue to work for yesmail.com remains unclear, and it's not known whether yesmail.com will receive the bankrupt online incentive marketer' e-mail clients. The unit served companies including Palm, Inc. and PETCO.
San Francisco-based Netcentives, which filed for Chapter 11 protection in early October, had previously promised the e-mail unit to Hans Peter Brondmo's Plum Acquisition Corp., through a letter of intent signed in October. Brondmo had founded Post Communications, which was acquired by Netcentives in April 2000 and became the backbone of its e-mail group.
According to Netcentives, the group's purchase by Brondmo had been subject to the approval of the bankruptcy court, which reserved the right to open it up to competing bids.
In addition to the proposed sale to yesmail.com, Netcentives said it had found buyers for much of its business. Offline marketing giant Trilegiant was the high bidder for Netcentives' patent portfolio, while e-tailer-turned-busienss services firm CD Micro agreed to buy the company's physical assets.
Charles River Consulting was the high bidder for the company's loyalty marketing group, which had clients including American Express and Citigroup.
Several regional consulting groups snapped up Netcentives' subsidiaries, MaxMiles and UVN Holdings.
All but the yesmail.com transaction have closed, sources said.
Once it's complete, the sale would close the book on four-year-old Netcentives, which had hoped to turn Web-based consumer and employee loyalty programs into a lucrative business. Indeed, the firm had seen success in expanding its program, going from 2 million to 40 million “relationships” under management within the last year.
Still, financial woes proved to be the firm's undoing. Despite some success in reducing quarterly losses, Netcentives faced an impending cash crunch this summer, prompting management to launch a restructuring effort, which sought to cut costs in part by trimming staff from 345 to 180. At the same time, it announced its intention to sell its e-mail unit. In September, Netcentives announced layoffs of another 50 employees, before finally declaring bankruptcy the next month.
