ReachLocal Buys Out Partner in Australia

ReachLocal has taken sole control of ReachLocal Australia by buying out the 50 percent of shares held by Netus, an Aussie VC backed by Rupert Murdoch’s News Corp. The buyout, at “an attractive multiple of Netus’ original investment,” means ReachLocal, which had a worldwide gross of $146 million in 2008, now fully controls all its international operations, including those in Canada and the U.K.

The Australian venture, which launched in December 2006, was ReachLocal’s first international effort. It has 100 employees and offices in Sydney, Melbourne and Brisbane. CEO Zorik Gordon said the Netus partnership was very helpful, as the company provided “vast experience in product internationalization, local market knowledge, management bandwidth and funding to confidently manage this rollout.”

In a statement, Netus said it had a lot of faith in ReachLocal’s future — even though it had sold all its shares — a successful pattern that the VC has previously employed with prior investments. “ReachLocal has a unique and strong business model, with extraordinary potential,” said Founder and Chariman Daniel Petre.

Steven Power, CEO, ReachLocal Australia, tells us that the company is poised to grow rapidly all over the country. Its offices are currently located along the eastern sea board. “The Australian market is not unlike the U.S., but it is a few years behind,” he adds.

Power adds that ReachLocal is competing “very, very well” with Sensis, the country’s leading directory player, which, he says, is still not oriented toward the search marketplace. “Ninety-seven percent of all online searches in Australia are on search engines, while just 3 percent come from Yellow Pages and White Pages,” he notes.

Power also notes that ReachLocal Australia always envisioned that it would “one day fold into to the mothership.” He adds that the role of Netus was largely independent of News Corp. and doesn’t really reflect an endorsement or dismissal of the business by NewsCorp. The relationship with News Corp. was mostly hands off. “From time to time, we had a few discussions with News Corp. But it was more of a friendly relationship,” he says. “They are smart media operators.”