Ask Jeeves Buys Interactive Search for $343M

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Ask Jeeves agreed to buy search company Interactive Search Holdings yesterday in a $343 million cash-and-stock deal that it said would double its share of the search market.

The acquisition would bring to Ask Jeeves portal and search sites operating as the Excite Network: Excite, iWon, My Way and My Search. Combined, the Excite Network sites drew 23.8 million visitors in January, according to comScore Media Metrix. Ask Jeeves, Emeryville, CA, said this traffic would more than double its search volume and give it a 7 percent share of the search market.

Ask Jeeves will pay $150 million in cash and issue 9.3 million shares, making the deal worth about $343 million based on Ask Jeeves' March 3 closing price. Ask Jeeves could pay another $17.5 million contingent on Interactive Search's operating performance. The deal is to close by the end of the second quarter.

Ask Jeeves hopes the deal propels it into the top tier of search engines, joining the likes of Google, Yahoo, MSN and AOL. With more searches, Ask Jeeves will be in a stronger position in its key relationship with Google, whose AdWords paid listings account for two-thirds of Ask Jeeves' revenue.

"By doubling our market share, we'll have substantially more traffic and advertising inventory," said Steve Berkowitz, chief executive of Ask Jeeves. "This will make Ask Jeeves more important both to the advertisers and our partner."

Ask Jeeves said it would operate Interactive Search, Irvington, NY, as its own unit and continue to operate the portals. Unlike Ask Jeeves, My Way, iWon and Excite are Internet portals, offering things such as e-mail accounts and news. My Way and iWon currently use Google for algorithmic and paid search; Excite uses a mix of algorithmic and paid search providers. My Search lets users search using five different search engines.

Berkowitz said the acquisition would let the company reach more Internet users with additional search sites, along with added distribution through Interactive Search's search applications such as the My Search toolbar.

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