Levy....if this doesn't fit your board title, I don't know what does....http://www.eastsidejournal.com/sited/retr_story.pl/25070
InfoSpace to buy Go2Net for $4.1 billion - Bellevue provider of Net services buys Web site network backed by Paul Allen
2000-07-27
by Chris Winters
Journal Business Reporter
BELLEVUE -- InfoSpace Inc., a Bellevue provider of Web services to wireless communications companies, has agreed to buy Go2Net Inc., a Paul Allen-backed Seattle company, for $4.1 billion in stock.
Go2Net manages a network of Web sites, including the Silicon Investor financial site and the Authorize.net e-commerce service.
Allen, Microsoft's co-founder, owns approximately 30 percent of Go2Net through his private investment firm, Bellevue-based Vulcan Ventures Inc., according to a January filing with the Securities and Exchange Commission.
Go2Net president John Keister said Vulcan's stake in the combined company will drop to just under 10 percent, but Vulcan president Bill Savoy will have a board seat with the new, larger InfoSpace.
The deal announced yesterday calls for InfoSpace to pay 1.82 of its shares for each share of Go2Net.
The companies announced the deal after the close of regular trading on Wall Street yesterday.
InfoSpace stock (Nasdaq: INSP) fell 15 percent to $40.25 in after-hours trading, according to Bloomberg News. Before the announcement, the shares rose $1.4375 to close yesterday's regular trading session at $47.75.
InfoSpace was founded in 1996 by chairman Naveen Jain, a former Microsoft product manager.
Initially focusing on providing directory services, the company has expanded to offer Web services to Internet and wireless companies. Buying Go2Net will allow InfoSpace to process online payments and offer interactive games over cable modems and digital subscriber lines, Jain said last night.
Go2Net will benefit from InfoSpace's partnerships with 20 wireless carriers worldwide, including Verizon Wireless and AT&T Wireless, as well as 3,100 Web-based affiliates with which InfoSpace does business.
Airport meeting led to deal
Jain and Go2Net's CEO and co-founder, Russell Horowitz, had been friends for a number of years. But one month ago, Jain introduced Horowitz to InfoSpace's new CEO Arun Sarin, just as he was rushing out to the airport. Within five minutes, Sarin proposed a merger.
Sarin joined InfoSpace in April, succeeding Jain as chief executive.
``Life couldn't be better for us,'' Jain said. ``The fit between us is natural.''
Jain will remain chairman of the combined company. Sarin will become vice chairman and CEO, while Horowitz will be vice chairman and president of the new company, which will be called InfoSpace.
Merger fulfills Allen's vision
While InfoSpace has also provided the front-end for online merchants, the acquisition of Go2Net brings in a back end to process transactions.
Go2Net's Authorize.net processes online transactions for 82,000 e-commerce merchants. InfoSpace already maintains a network of 600,000 merchants that can now have an in-house transaction service.
``We basically doubled the critical mass in terms of services,'' Horowitz said. The two companies have basically no overlap in terms of services offered to customers, he added. Horowitz will become vice chairman and president of InfoSpace after the merger.
Jain, who once his company the ``arms merchant of the Internet,'' described the opportunity to combine the companies as bigger than when Bill Gates and Allen formed Microsoft.
InfoSpace will now be the only company to provide cross-platform services for its clients, Jain said, meaning it can offer customer firms the opportunity to distribute content through a cellular phone, a cable modem, DSL or digital TV.
``In some sense we are in fact making the vision of Paul Allen come true,'' Jain said.
Despite some of the content offerings Go2Net is bringing to the table, however, InfoSpace will remain primarily an infrastructure company, said Go2Net co-founder and president John Keister.
``Our vision is not to be a media company,'' Keister said, adding that the company would primarily be competing with other infrastructure companies like Foster City, Calif.-based Inktomi Corp. and Mountain View-based VeriSign Inc.
Analyst hails deal
Analyst Jennifer Jordan of First Security Van Kasper called InfoSpace's plans to acquire Go2Net a positive move for both companies.
``They're beginning to have what you need to make e-commerce happen with the phone,'' Jordan said. She expects the company to immediately to offer new services to its wireless partners.
``Next, they begin -- as InfoSpace already has begun -- to look internationally,'' she said.
``This is one of those rare cases in life where you get almost everything,'' Horowitz said.
The two companies employ approximately 500 people each, and neither expects to lay off staff. InfoSpace posted a net loss of $31.2 million this past quarter, compared to a loss of $9.9 million for the same period a year ago.
Chris Winters can be reached at 425-453-4232 or at chris.winters@eastsidejournal.com. |
