FindWhat.com, Espotting Extend Merger Talks
Espotting had not completed an audit of its finances, and the two paid listings companies continue to negotiate new terms for the deal they inked more than six months ago, FindWhat said. They agreed to extend the date when either company can walk away from the merger to Jan. 31, 2004, adding a month to the deadline in the original agreement. Espotting cannot scuttle the deal until it delivers the audited financial statements.
"While the delay in the process has been longer than we would have liked, both sides believe it is critical to take the necessary time to protect the interests of our respective shareholders and to come to the right conclusion," said Craig Pisaris-Henderson, FindWhat's chief executive, in a statement.
Under the terms of the original merger agreement struck in June, FindWhat, Fort Myers, FL, would pay Espotting shareholders 8.1 million FindWhat shares and $27 million in cash. The amount of cash was to vary based on Espotting's audited financial results. The acquisition's cost was valued at $163 million.
The deal was put into limbo three months later after FindWhat discovered problems with the British search company's finances that called into question Espotting's claim of profitability. FindWhat withdrew the financial projections it gave when announcing the merger that Espotting would generate $7.5 million in pre-tax income on $75 million of revenues.
FindWhat said it hoped to have a resolution to the merger early in 2004, and was fully prepared to walk away from the deal if the price tag is not reduced.
The merger of the two companies would marry FindWhat's paid listings network of hundreds of small and mid-size sites with Espotting's network in 10 European countries. Unlike FindWhat, which has carved out a niche mostly outside of the orbit of Google and Yahoo's Overture Services, Espotting competes for distribution deals with the search giants in Europe. With more attention paid to the growing paid listings market there, Espotting has lost some key deals in recent months. Ask Jeeves UK defected to Google in May, and Yahoo Europe has switched to Overture last month.