ValueClick to Buy Affiliate Marketer Be Free in $128M Deal
The deal, which is to close by the end of the second quarter, calls for ValueClick to convert each share of Be Free common stock into 0.65882 shares of ValueClick common stock. ValueClick will issue nearly 43.4 million shares of its common stock for all of Be Free's outstanding common stock. The merged company will be known as ValueClick.
When the deal is completed, Be Free shareholders will own 45 percent of ValueClick. Be Free will become a wholly owned subsidiary of ValueClick. James Zarley, ValueClick's chairman/CEO, will continue in that role with the newly merged company.
With this deal, ValueClick hopes to consolidate its predominately cost-per-click and cost-per-action ad network and its ad serving technology practices with Be Free's affiliate marketing products and services. Online affiliate marketing is typically based on cost-per-click or cost-per-action models.
The move marks another step in ValueClick's efforts to expand beyond its core practice of cost-per-click online media sales. In 2000, the company acquired a logfile analysis firm, a co-registration firm and a performance-based online ad network. Last year, ValueClick acquired MediaPlex, a provider of online ad serving technology and agency software.
Analysts noted that with the addition of MediaPlex, ValueClick can better compete with DoubleClick Inc.'s DART for publishers ad serving platform.
"ValueClick's purchase of MediaPlex not only has boosted its cash coffers, revenue and gross margins, but instantly transformed and diversified ValueClick's business away from being a one-trick pony network media business," said Lanny Baker, an analyst with Salomon Smith Barney.
Baker also noted that by shoring up its technology offerings, ValueClick more easily can offset its weakening media revenue.