Issue: Deal Consolidates
Yahoo!'s Position as Internet Ad Leader
News: In a
move that may have sweeping implications for the world of online advertising,
Yahoo! issued a statement this morning that it was buying Overture Services
Inc. in a transaction worth approximately US$1.63 billion.
If the deal closes
at this price, Yahoo! will be paying about 88 percent of Overture's highest
valuation in the last 12 months. Each outstanding common share of Overture
will apparently receive 0.6108 share of Yahoo! common stock and US$4.75
in cash. That means Yahoo! will be paying something less than US$300 million
in cash for the deal.
By acquiring Overture,
a provider of pay-for-performance keyword advertising, Yahoo! gets Overture's
technology infrastructure, including search engines AltaVista and FAST,
its 88,000 clients and its extensive distribution network. The deal enables
Yahoo! to consolidate its position as one of the top two sites for online
search and as the provider of the most comprehensive suite of advertising
options and services available. It also sets the stage for some very interesting
scenarios and potential further consolidation, both in search and Internet
Yellow Pages (IYP).