FindWhat.com merges with E-Spotting - UPDATE 2 18.06.2003 22:43 Headlines
SAN FRANCISCO (AFX) - Many observers had said that paid-search company
E-Spotting Media would be a great catch for a big portal distribution partner
seeking to build a European presence.
E-Spotting apparently preferred to remain an advertising network with no ties to
any distribution partner.
Instead E-Spotting and FindWhat.com on Wednesday said they're merging in a deal
valued at $163 million in stock and $27 million in cash.
The cash will go to E-Spotting shareholders and deplete FindWhat's cash position
of roughly $28 million. But FindWhat.com CFO Phillip Thune said that the
combined company will be cash-flow positive and if FindWhat.com needs to raise
cash, the "money is flying." Additionally, E-Spotting turned profitable in the
first quarter.
On the news, shares of FindWhat.com surged 36 percent to $18.63, a new 52-week
high.
The deal brings the leading European paid-search company with one of the
fast-growing search companies in the U.S. Together, the combined companies will
have 40,000 advertisers in the U.S., the U.K., France, Germany, Spain, Italy and
Scandinavia.
By joining forces, both sides have seen tremendous interest from their
distribution partners seeking to get more listings on their sites.
FindWhat's Thune said that many of its U.S. distribution partners have
international traffic. E-Spotting's listings would enable the U.S. distribution
partners to offer relevant listings, he suggested.
The move by both companies raises some question about the distribution partners
both companies have and whether a deal puts these distribution partnerships at
risk, or strengthens them.
E-Spotting has had a longstanding distribution deal with Yahoo in Europe. To
this end, FindWhat.com, which does not have a relationship with Yahoo in the
U.S., may have an opportunity to sell a private-label paid-search business to
the giant portal. Thune said the company will seek to leverage E-Spotting's
relationship with Yahoo by offering Yahoo a private-label paid-search business.
But it's premature to speak of such a partnership, he said.
E-Spotting's relationship with Yahoo in Europe is also expected to remain
intact, said Jonathan Bunis, E-Spotting Media's chief operation officer. Bunis
would not elaborate on E-Spotting's traffic acquisition costs, but said that in
time they should come down.
Both Bunis and Thune believe that a combined company will drive down the
combined acquisition costs. Thune said that FindWhat is still estimating traffic
acquisition costs at around 50 percent by the end of the year.
Meanwhile, Yahoo, EBay and Amazon jumped ahead to multi-year highs. Yahoo rose
3 percent to $32.23, continuing a rapid climb back up from the shares' October
low of around $9. The current level has not been seen for two and a half years.
EBay added 1.4 percent to $102.66. It hit an intraday high of $103.85 that
marked a three-year high.
Doubleclick shares also rose, chalking up a gain of 2 percent to $9.52, as the
online marketer sold $135 million zero coupon convertible bonds, due 2023. The
debt is convertible "under certain circumstances" into about 11 million shares
of common stock at a price of $13.12 per share.
Similarly, CNet Networks cancelled a convertible debt sale only one day after
announcing its intention to sell $100 million in notes. Shares fell 6 percent in
response to the proposed deal on Tuesday. On Wednesday, after the deal was
called off, shares rose 5 percent to $5.30.
"The available terms were not sufficiently attractive given that our current
capital and internally generated cash flow will meet our growth objectives for
the foreseeable future," the company said in a statement.
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