Ask Jeeves acquiring Interactive Search Holdings for $343 million

 
Ask Jeeves announced the acquisition of Interactive Search Holdings, whose businesses and online properties include My Way, My Search, My Web Search, iWon, Excite and the MaxOnline advertising network. Once again, the search landscape changes and with this acquisition AskJeeves will boost its odds of collecting ad revenue from search-related marketing.

"The acquisition of Interactive Search Holdings will be an important step in Ask Jeeves' growth strategy," said Ask Jeeves CEO Steve Berkowitz. "This acquisition will double our market share, enhance our ability to compete in the fast-growing search market, and is expected to increase the financial returns to our shareholders."

In the fourth quarter of 2003, Interactive Search had approximately 700 million searches, compared to 680 million searches on Ask Jeeves' sites. In October 2003, comScore Media Metrix ranked Ask Jeeves number 28 in overall traffic by, while the Excite Network (consisting of Excite and iWon) came in at number 9.

Berkowitz said the company would benefit from Interactive Search's strengths in distribution and direct marketing and hopes the company will continue to be perceived as search-centric even though this acquisition branches Ask Jeeves' holdings into ad representation.

"We'll have multiple brands that will offer users different search experiences through search only Web sites, search-focused portals and search-centric downloadable apps," Berkowitz said. "This will allow us to reach more users through multiple access points."

iWon.com and portal Excite.com, are destination sites that rely on search-related ads and pop-up advertising. My Way, in contrast, provides a Web navigation environment free of pop-up and banner ads and solely supports itself from keyword-search ads from Google.

Jupiter Research media analyst Nate Elliot said that the acquisition should provide Ask Jeeves with distribution for its growing ad network outside of search. The company has been building an ad network in which it sells banners, pop-ups and pop-unders. "This looks like a big improvement to the distribution of that network," said Elliot.

Under the deal, which is expected to close sometime in the third quarter, Interactive Search will become a wholly owned subsidiary of Ask Jeeves. Ask Jeeves will issue 9.3 million shares of common stock to Interactive Search, and another $150 million in cash. It will also pay an additional $17.5 million in cash based on the company's operating performance.

"This acquisition will double our market share, enhance our ability to compete in the fast-growing search market, and is expected to increase the financial returns to our shareholders," Berkowitz said in a statement.

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