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MarketWatch.com, Pinnacor in $103M Merger

Looking to sink its teeth deeper into the content syndication business, San Francisco-based MarketWatch.com on Wednesday shelled out $103 million in cash and stock to acquire Pinnacor, Inc. (formerly ScreamingMedia).

For MarketWatch.com, which already dabbles in the paid content space with its BigCharts.com subsidiary and other paid subscription newsletters, the Pinnacor acquisition adds a major player in the content aggregation/syndication space and a slew of Web-based technology targeting the financial services, brokerage and media industries.

Under terms of the transaction, a new combined company will be set up after MarketWatch.com pays $44 million in cash plus 6.5 million shares of stock at an estimated exchange ratio of 0.2659. The aggregate purchase price for Pinnacor would be $103.2 million and Pinnacor stockholders will own approximately 27 percent of the combined company's equity, the companies said in a joint statement.

Pinnacor representatives will take two seats on the new company's board of directors.

MarketWatch.com said the deal would expand its presence as a provider of premium-branded news, tools and charting capabilities. Since the early days (ScreamingMedia) as a content aggregator, Pinnacor has found its niche in selling technology that encompass market data and investment-analysis tools for financial services firms.

The company, which was renamed in October when ScreamingMedia acquired Inlumen for $2.6 million, also hawks business information, portal software and messaging services for enterprise clients and wireless carriers.

With the deal, MarketWatch.com gets hundreds of new customers in the banking, brokerage, media, and insurance sectors. Those new customers include Boeing , which inked a deal in May 2001 to integrate its SiteWare platform into the high-speed Internet services being offering by the Connexion by Boeing service.

At the time, that deal was described by ScreamingMedia as the largest in its eight-year history. That pact called for ScreamingMedia to be paid for content distributed on the Connexion by Boeing service, which provides high-speed Internet access services to flying passengers.

"This is a terrific combination. We bring together world-class journalists, designers and engineers as part of a company that already counts as customers many of the leading financial services and media companies, MarketWatch.com CEO Larry Kramer raved in a statement. "We are also able to deliver diversified revenues streams, with significant contributions from advertising and licensing activities, and a growing presence in subscription services and wireless technology," he added.

The merger also signals continued contraction in the content aggregation space. Before adopting the Pinnacor name, ScreamingMedia was at the heart of negotiations to acquire iSyndicate. After missing out on the deal, the company acquired Stockpoint in a $21 million transaction to boost its offerings to the financial services industry. Interestingly, Stockpoint was one of MarketWatch.com's main competitors.

ScreamingMedia was one of a handful of New York-based technologies to take the IPO plunge in 2000, when tech stocks were given the cold shoulder on Wall Street.