Evidence that Digg may be preparing for a buyout

By Jacqueline Emigh, BetaNews

December 18, 2007, 5:07 PM

In the latest of a long string of rumors surrounding Digg, some financial publications and bloggers are speculating that the online community is placing itself on the shopping block.

This morning, financial publications and bloggers including VentureBeat were speculating that the online community is placing itself on the shopping block. It has apparently hired Allen & Co., an investment bank specializing in media deals, to cook up an offer.

The asking price could be around $300 million, it was reported. Microsoft and Barry Diller's IAC/InterActive Corp. are now among the rumored possible suitors.

As the online buzz continued, Valleywag added fuel to the flame by mentioning that Digg CEO Jay Adelson got invited this year to Allen & Co.'s annual shindig in Sun Valley, and that "the conjecture about a Digg sale is likely explained by Allen bankers' discreet inquiries" about selling Digg at an estimated price tag of $300 million.

According to Valleywag, IAC had previously expressed an interest in acquiring Digg, but then later backed away from the deal.

Picking up the thread from other postings, WebProNews soon cited Microsoft as a likely buyer for Digg.

But the chain of speculation actually began much earlier -- way back on January 25, 2006, when blogger Kevin Burton incorrectly predicted that Yahoo would buy Digg the following week.

At press time, spokespersons for Digg and Allen & Co. had not returned phone calls and e-mails from BetaNews requesting confirmation or denial of the rumors. But they're probably accustomed to receiving inquiries about reported acquisition deals, many of which do turn out to be untrue.