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Yahoo swallows up Kimo.com

Internet giant Yahoo bought the nation's most popular Web portal yesterday, saying Kimo.com would help it expand in both Taiwan and the Greater China region.

Under the acquisition agreement, Yahoo will hand over 2.25 million shares to Kimo's owner, Systex Corp (精業), in exchange for all of the firm's outstanding shares.

Kimo will become part of Yahoo Taiwan, one of Yahoo's 24 global properties.

Executives from both companies declined to comment on how much the sale would cost. But based on Yahoo's closing price of US$65 on the NASDAQ on Wednesday, the deal has an estimated worth of US$146 million.

Shares of Systex rose 6.5 percent to NT$66 yesterday in anticipation of the sale, which is still subject to final approval by Taiwan regulators.

The move signals Yahoo's desire to capture the top spot in Taiwan's Internet market, which is ranked as Asia's fourth largest and estimated to grow annually by 30 percent to 35 percent.

Yahoo officials said the deal combines Kimo's local industry expertise with Yahoo's global network.

"Not only is Taiwan's Internet market very big, its position in the Greater China market also makes it very important," said Jerry Yang (楊致遠), the company's CEO and head yahoo.

Kimo, one of Taiwan's most visited Web sites, reported that during the third quarter this year it recorded 25 million page views per day and four million registered users.

"Kimo's seasoned management team has done a fantastic job of building a solid and successful operation that provides superior local content and services to the online audience in Taiwan," said Heather Killen, Yahoo's senior vice president of international operations.

"We really expect that these folks will be able to help us to develop our business throughout the Greater China region," Killen said.

David Lu (盧大為), chief executive officer of Kimo, said the acquisition would allow Kimo to "leverage Yahoo's global network and vast resources to enhance its presence and impact a larger audience."

James Wang, (王建中) Internet analyst for Merril Lynch, said that the acquisition is a gift for both Yahoo, which has enjoyed as much success as it would have liked in gaining market share in Taiwan, and Kimo.com, which could use Yahoo's brand name and knack for turning a buck.

Wang said that as competition intensifies, it is more than likely that further consolidation of the market, which Jerry Yang described as "mature" would follow.

"It's probably going to spark further consolidation with other foreign brands like Lycos and Sino possibly acquiring a local portal," Wang said.
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