CNET Buys ZDNet
interactive.wsj.com
CNET Networks Inc. agreed to acquire rival Ziff-Davis Inc. for $1.6 billion in stock, adding a global reach to the technology information company.
CNET, an Internet company providing technology-product information, news and television programming, will gain Ziff-Davis's Computer Shopper, a business-to-consumer technology publication and Web site (www.zdnet.com/computershopper/); Smart Planet, an online educational service focused on the technology industry (www.smartplanet.com); and ZDNet, an online property (www.zdnet.com).
Under the terms of the merger agreement, each share of ZD common stock will be converted into 0.3397 CNET common shares, and each share of ZDNet common stock will be converted into 0.5932 CNET common shares. (ZDNet trades as a tracking stock.) CNET expects to issue about 50 million common shares in the transaction. CNET closed Tuesday at $32.1875 Tuesday.
The transaction, which will be accounted for through purchase accounting, is expected to close in the fourth quarter. CNET Chief Executive Shelby Bonnie will remain CEO of the combined entity, while Ziff-Davis CEO Dan Rosensweig will become president. CNET President Rich Marino will become chief operating officer of the combined company.
Softbank Corp. of Japan, which owns more than 50% of New York-based Ziff-Davis, will own a 17% stake of he combined company and supports the transaction, the companies said.
Through the acquisition, announced Wednesday, CNET will gain a significant presence in 25 markets spanning Europe, Asia, North America and Latin America, Mr. Bonnie said. Currently, CNET's international holdings include only eight Web properties in the Asia-Pacific region.
"We look a technology as the only truly global language," Mr. Rosensweig said.
The transaction is expected to add to earnings, from an Ebitda standpoint, or earnings before interest, taxes, depreciation and amortization. The new entity will have 1,600 employees and more than $500 million in revenue in 2001.
Ziff-Davis recently completed a restructuring process that saw the spinning off of its events business, which includes Comdex, one of the world's largest technology fairs, NetWorld+Interop, and Seybold Seminars. It also sold its print magazines.
CNET's Mr. Bonnie said the two companies' overlap is only 25%, leaving a significant opportunity to gain new users and bigger market share.
The agreement requires approval of the shareholders of both companies. |
