UPDATE 1-Moneysupermarket to buy MoneySavingExpert for 87 mln stg

Fri Jun 1, 2012 6:07am EDT

* To pay 35 mln stg in upfront cash, 22.1 mln shares

* Deal includes conditional deferred payment of 27 mln stg

* Expects deal to add to earnings in first full year

June 1 (Reuters) - Price comparison website MoneySupermarket.com Group said it would buy British personal finance website MoneySavingExpert in a deal worth up to 87 million pounds ($133.91 million).

The deal comes at a time when price comparison websites like MoneySupermarket have benefited from shoppers actively looking for promotional deals to make their money go further as rising prices, muted wage growth and government belt-tightening put the squeeze on British disposable income.

MoneySupermarket, whose website had 140 million visitors last year, said it would pay 35 million pounds in cash and 22.1 million shares.

The deal is expected to add to MoneySupermarket's earnings in the first year, and includes a deferred consideration of up to 27 million pounds conditional on MoneySavingExpert meeting certain non-financial goals.

Founded in 2003 by journalist Martin Lewis, MoneySavingExpert offers free services, including information and recommendations on credit cards, loans, shopping, deals, banking and saving, and insurance.

The consumer oriented website, whose motto is "Cutting your costs. Fighting your corner!", gets about 59 percent of its revenue from MoneySupermarket.

Tee acquisition will be funded through existing cash and a new 20 million pound bank facility, and is expected to be completed between September and October.

"This is an interesting deal albeit that it does in part seem to be a defensive step against the increasing encroachment of Google into the price-comparison space," Peel Hunt analyst Mark Williamson said in a note.

Williamson said that with the company using its cash and taking on debt to fund the purchase, the deal will reduce the prospect of further special dividends in the near term.

"... The inherently strong underlying cash generation suggests that a resumption of special dividends should be possible within a couple of years."

MoneySupermarket shares were up 1 percent at 116.45 pence at 1003 GMT on Friday on the London Stock Exchange. They have gained 10 percent this year.

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