Overture to buy AltaVista for $140 mln
2/18/2003 7:07:31 PM
PASADENA, Calif., Feb 18 (Reuters) - Internet search company Overture Services Inc. (OVER) on Tuesday said it would buy Internet portal AltaVista Co. from CMGI Inc. (CMGI) for $140 million in cash and stock in a move to boost its own "competitive advantages".
The news sent Overture shares, which had closed 3.6 percent higher at $22.79 on the Nasdaq, down to $20.90 in after-hours trade. CMGI shares rose to around $1.01 from their closing Nasdaq price of 83 cents.
Overture, which provides a way for advertisers to bid for well-placed spots among Web search results distributed to its partners such as Yahoo Inc. (YHOO) and Microsoft Corp.'s (MSFT) MSN, said it would pay AltaVista with common stock currently worth $80 million plus $60 million in cash. It also said it would assume some of AltaVista's liabilities.
In 1999, CMGI paid Compaq Computer Corp. $2.3 billion for an 83 percent stake in Palo Alto, California-based AltaVista. Compaq has since merged with Hewlett-Packard Co. (HPQ)
In a conference call with analysts, Overture Chief Financial Officer Todd Tappin said the deal, which is expected to close in April, "would be dilutive in the near term."
The acquisition is expected to add to Overture's earnings by mid-2004, he said.
Tappin declined to update guidance, saying Pasadena, California-based Overture was still working out integration plans and future strategies.
COMPETITIVE QUESTIONS
Yahoo recently said it hired Overture's vice president of search, Tim Cadogan, to do the same job in its search unit. Although both companies have said their relationship remains strong, some analysts have speculated that Yahoo might be exploring the creation of its own internal paid-search products.
"We were not motivated to act by other external factors," Overture President and Chief Executive Ted Meisel said, when analysts asked whether the changing competitive landscape drove the deal.
"We do not believe we are creating a competitor for our partners," he added.
Meisel said the tie-up would help Overture strengthen its offerings, allow the company to syndicate AltaVista's advanced algorithmic search technology that scours the Web for answers to users' queries, and give Overture a place to test new products and services before rolling them out to partners.
Representatives from Overture partners MSN and Yahoo were not immediately available for comment. (Additional reporting by Ben Berkowitz in Los Angeles and Jeffrey Goldfarb in New York) |
