October 26, 2006

According to several sources close to the deal, San Francisco-based startup Digg.com has been in recent acquisition talks with a number of companies, one of them being News Corp.

But the company was unable to secure an offer in the price range they were looking for (at least $150 million or more), and Digg could close a Series B round of financing instead.

Rumors of the upcoming financing led News Corp. and possibly others (Google?) to initiate acquisition discussions with Digg, and the talks were subsequently opened up to other interested parties as well.

No formal written offers for Digg were tabled, sources say, because Digg’s minimum sell price was at least $150 million.

One point of controversy was around Digg’s claim of 20 million unique monthly visitors and steep monthly growth, whereas the Comscore’s most recent September report shows only 1.3 million monthly unique visitors and flat growth since April.

These numbers are for U.S. households only.

If a firm offer isn’t made in the next week or so (higher than $150 million), look for Digg to close a $5 plus million second round of financing later in 2006, possibly with Greylock Partners.

Greylock is already an investor in Digg, leading their $2.8 million Series A round in October of last year.

According to various reports, Omidyar Networks and several angel investors also participated in the round.

Source: Tech Crunch