Overture makes $140m bid for AltaVista

Overture Services plans to buy ailing former search giant AltaVista for $140m in cash and stock.

Overture, which auctions placement in search results to advertisers, said yesterday that it plans to bolster its commercial service with AltaVista's technology. AltaVista, which is majority owned by CMGI, develops technology that crawls the web and returns relevant search results in response to users' queries.

Overture plans to license the technology to its customers, which include Yahoo!, MSN and AOL Europe. Overture will also use AltaVista.com to test new search services and marketing products for its advertisers.

Ted Meisel, president and CEO of Overture, said: "We, as many observers know, have been looking at whether and how to add algorithmic search to our arsenal over the last year. Algorithmic search is a highly engineered product... this was the right time and right product.

"It was time to bring the technology in-house so we could provide a complete solution to partners."

Overture will pay AltaVista in common stock currently valued at $80m, plus $60m in cash; and it will assume certain AltaVista's liabilities. The company said that it would not change its financial guidance for the first quarter of 2003. The purchase is expected to close in April and will be accretive to Overture's earnings by mid-2004.

AltaVista CEO James Barnett will remain at his post, answering to Overture executive vice president Alex Cory, who will head up the business.

The announced buyout follows Yahoo!'s proposed $235 million acquisition of Inktomi, whose technology rivals that of AltaVista's. Yahoo!, Overture and major search providers have seized on web search as a key area for growth in online advertising in the coming year. To drive consumer demand for their services--and clicks on paid listings - Yahoo! and Overture are focused on providing the fastest, most relevant web search results to rival those of internet darling Google.