June 18, 2003 10:34 AM PDT
Search providers agree to merge
Under terms of the deal, London-based Espotting will receive about 8.1 million shares of Fort Myers, Fla.-based FindWhat's common stock and $27 million in cash. FindWhat also will offer 2.1 million shares of its stock to Espotting employees and affiliates at an exercise price of $1.73 a share.
If the deal is completed, Espotting will become a subsidiary of FindWhat, with operations in the United States, the United Kingdom, France, Germany, Spain, Italy and Scandinavia serving 40,000 advertisers.
FindWhat's CEO Craig Pisaris-Henderson will retain his title and role in the merged company; Espotting founder and CEO Doug Ishag will become vice chairman.
The merger is an attempt by two smaller commercial search engines to better compete against market leaders Overture Services and Google, which have become extremely popular with consumers, advertisers and investors in the past two years. Last quarter, portal giant Yahoo reported that 19 percent of its revenue was derived from a deal with Overture. And many investors are anticipating an initial public offering for Google when overall market conditions improve.
Paid search businesses sell keywords to advertisers that are seeking higher placement on their search pages. Each time a person clicks on an advertiser's link, the commercial search provider receives a fee. Providers of these paid searches have struck distribution deals with Web giants such as Yahoo, MSN and America Online.
The business is also picking up in Europe and Asia. Overture this year outlined plans to expand into international markets, and Google has signed deals with overseas portals.
FindWhat said the combined company projects 2003 revenue of $142.5 million and pretax net income of $24.5 million, on a pro forma basis. The merger is expected to close in the fourth quarter of 2003.
A name for the combined company has not been determined, but the shares will be traded under FindWhat?s current ticker symbol, FWHT. In midday trading Wednesday, the shares were up $3.09, or 23 percent, to $16.78.