Marchex acquires VoiceStar for $28M

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Marchex Inc., a local online advertising company and publisher of local content, has entered into an agreement to acquire VoiceStar, a call-based advertising services firm in a $28 million deal.

The acquisition extends Marchex's technology offering from search and online into voice-based services.

"For years we've recognized that there is a key opportunity in local, so we've been positioning ourselves to build a unique position in local with a variety of technologies in the space," said Mark S. Peterson, vice president of public relations at Marchex, Seattle.

Marchex will pay about $20 million in transaction consideration and $8 million in company investment for the acquisition, which is expected to be completed in October. The transaction consideration consists of about $12.9 million in cash consideration and Marchex will issue about $7.1 million in restricted stock that is subject to vesting over two and a half years from closing to certain employees of VoiceStar. In addition company investment consists of $8 million relating to products, infrastructure, human resources and other items through 2008.

VoiceStar will continue to operate from its headquarters in Philadelphia. The VoiceStar acquisition adds more than 100 local advertiser aggregators, including Comcast, The Cobalt Group, R.H. Donnelley-Dex and YellowBook USA to Marchex's partner roster, which includes AT&T and

VoiceStar's technology generates custom, trackable phone numbers for advertisers. Whenever an advertiser's phone number is dialed by a consumer who sees a relevant advertisement online or offline, the calls are routed through VoiceStar's servers to the advertiser. From that point, the call is tracked, monitored, recorded and billed. The technology supports multiple advertiser implementations, including click-to-call, Web form-to-phone and other call-based products.

In addition to the Marchex acquisition, the firm has hired Internet veteran Bill Day as chief media officer. In this newly created role, Day will oversee Marchex's media strategy, including its online content, consumer-facing initiatives and related advertising strategies.

With this announcement, Day assumes responsibility for certain areas and strategies that previously were directed by Marchex chairman/CEO Russell C. Horowitz. Day, who assumes his new position immediately, will report directly to Horowitz.

"We are glad to have him coming on board," Peterson said. "He is a great asset to our team."

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