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BARRY DILLER BUYS SEARCH ENGINE ASK JEEVES

$1.85 Billion Stock Deal Puts InterActive Corp. in Search Ad Business

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NEW YORK (AdAge.com) -- Barry Diller's company IAC/InterActive Corp. has signed a pact to purchase second-tier search engine AskJeeves.com in a stock deal worth $1.85 billion, giving the media mogul and IAC a stake in the most lucrative area of online marketing.
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Under the terms of the agreement, IAC will issue 1.2668 shares of common stock for each share of Ask Jeeves stock in a tax-free transaction valued at $1.85 billion. IAC intends to buy back through its previously authorized share repurchase programs at least 60% of the number of shares it will issue for this acquisition.

Competitive arena
The acquisition puts IAC in the competitive area of search-engine marketing. Google and Yahoo now control about two-thirds of the overall search spending online, according to online marketing research company eMarketer. Paid search advertising is expected to generate 41% of the $11.5 billion budgeted for online advertising this year, eMarketer reports.

Last month Ask Jeeves announced it was launching one of its largest marketing pushes in years, TV marketing campaign consisting of six humorous commercials, plus a national print ad campaign.

"Ask Jeeves was founded almost 10 years ago based on the idea that simple text search results alone are not sufficient or satisfying -- but, rather, that consumers want answers to questions -- and questions posed in natural language and answered with spot-on accuracy were especially desired and appealing," Mr. Diller, IAC's chairman-CEO, said in a statement.

Filling a niche
Ask Jeeves fills a niche Mr. Diller is missing in his e-commerce conglomerate. Mr. Diller built up News Corp.'s Fox TV network, and InterActive Corp. split off from USA Networks in 2002, shortly after he resigned as resigned as co-CEO of Vivendi Universal's Vivendi Universal Entertainment. IAC operates travel, retailing, ticketing, personals, media, financial services, real estate and teleservices Web sites, reaching 44 million users monthly.

AskJeeves search services will be integrated throughout the IAC sites, according to the company. Other plans include improving Ask Jeeves' local search offerings and integrating IAC brands into the Ask Jeeves properties.

Ask Jeeves will remain independent, with offices in Oakland, Calif. Steve Berkowitz will stay on as CEO.

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