Online search engine Ask Jeeves Inc is buying a family of popular Web sites that includes Excite.com and iWon.com, doubling the company's size as it vies to wrest market share away from industry leaders Google Inc and Yahoo! Inc.
The value of the cash-and-stock deal announced Thursday climbed to US$420 million after Ask Jeeves' shares soared by 40 percent on the news.
Emeryville, California-based Ask Jeeves is paying US$150 million in cash and 9.3 million shares of its stock for Interactive Search Holdings, a privately held company in Irvington, New York, with about 200 employees and more than US$100 million in annual revenue.
The acquisition marks Ask Jeeves' latest attempt to expand its audience. Earlier this week, the company revealed that its search engine would stop accepting money to crawl through the material on Web sites -- a service known as "paid inclusion" that has been embraced by Yahoo and rejected by Google.
Ask Jeeves believes its search engine will deliver more relevant results without paid inclusion, attracting more visitors.
The Interactive Search acquisition, expected to be completed before July, should broaden Ask Jeeves' appeal even more.
Launched in 1999, Interactive Search's best-known properties are the sweepstakes site iWon, which gives away US$10,000 per day to attract traffic, and Excite, which was bought for US$10 million in 2001 when the site was auctioned in bankruptcy court. The company's other sites include My Way, which waged an anti-Yahoo marketing campaign in late 2002.
Interactive Search -- better known as The Excite Network -- ran the 12th-busiest group of Web sites in January, attracting a total of 23.8 million unique visitors, according to comScore Media Metrix, a research firm. Ask Jeeves ranked as the 26th most popular destination with 15.6 million unique visitors.
Based on the combined audience of more than 36 million, Ask Jeeves' collection of Web sites would become the eighth most popular property on the Internet, ranking just ahead of Amazon.com, according to comScore's latest traffic figures.
"The foundation of a great business on the Web is search," Berkowitz said in an interview. "This deal should really enhance our competitive position."
After losing US$699 million during its first six years in business, Ask Jeeves has bounced back from the depths of the dot-com crash on the strength of search-powered advertising.
Ask Jeeves posted a US$26 million profit last year on revenue of US$107 million and expects its operating profit this year to roughly double, boosted by the acquisition. The company said Thursday that it couldn't accurately estimate its projected net income this year because the Interactive Search deal will likely result in special accounting charges.
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