The Associated Press
SAN FRANCISCO - Online search engine Ask Jeeves Inc. is buying a family of popular Web sites that includes Excite.com and iWon.com, doubling the company's size as it vies to wrest market share away from industry leaders Google Inc. and Yahoo! Inc.
The value of the cash-and-stock deal announced Thursday climbed to $420 million after Ask Jeeves' shares soared by 40 percent on the news.
Emeryville, Calif.-based Ask Jeeves is paying $150 million in cash and 9.3 million shares of its stock for Interactive Search Holdings, a privately held company in Irvington, N.Y., with about 200 employees and more than $100 million in annual revenue.
Ask Jeeves' shares surged $8.30 Thursday to close at $29.01 on the Nasdaq Stock Market, reflecting investor enthusiasm for a deal that will pull together a collection of Web sites with a combined online audience larger than Amazon.com.
"It was a very smart move," industry analyst Derek Brown of Pacific Growth Equities said. "This allows Ask Jeeves to gain significantly more market share than it could have organically."
Earlier this week, the company revealed that its search engine would stop accepting money to crawl through the material on Web sites - a service known as "paid inclusion" that has been embraced by Yahoo and rejected by Google.
The Interactive Search acquisition, expected to be completed before July, should broaden Ask Jeeves' appeal even more.
Launched in 1999, Interactive Search's best-known properties are the sweepstakes site iWon, which gives away $10,000 a day to attract traffic, and Excite, which was bought for $10 million in 2001 when the site was auctioned in bankruptcy court. The company's other sites include My Way, which waged an anti-Yahoo marketing campaign in late 2002.
Interactive Search - better known as The Excite Network - ran the 12th-busiest group of Web sites in January, attracting a total of 23.8 million unique visitors, according to comScore Media Metrix, a research firm. Ask Jeeves ranked as the 26th-most popular destination with 15.6 million unique visitors.
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