March 20, 2003 7:46 AM PST

Yahoo seals Inktomi deal

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Yahoo has completed its acquisition of Web search technology company Inktomi, highlighting the portal giant's intent to boost its own flourishing search business.

With the acquisition, which closed Wednesday, each common share of Inktomi will be converted to $1.65 in cash paid by Yahoo. Wells Fargo Bank Minnesota, the paying agent, will mail documents for the trade-in next week.

The acquisition is the Yahoo's most aggressive attempt to refine its Web search product. The model for the nascent Internet industry in the late 1990s, Yahoo's human-edited search directory has since taken a backseat to its commercial search partner Overture Services, which has pumped tens of millions of dollars into Yahoo's coffers and helped Yahoo achieve three consecutive profitable quarters.

Although Yahoo executives have been vague about their plans for Inktomi, industry analysts expect Yahoo to tap Inktomi's paid-inclusion business, in which advertisers pay to be placed higher in its search results.

Yahoo CEO Terry Semel said in a statement that the acquisition will "offer more value to consumers and businesses through programs such as paid inclusion, which provide higher-quality commercial search results."

Analysts speculate that Inktomi's algorithmic search technology could be refined enough to replace Google as Yahoo's default provider. Yahoo's relationship with Google has been transforming from partner to competitor now that Google has become one of the most popular destinations for Web searches.


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