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RoweCom Acquires NewsEdge in $227 Million Deal

Leading e-commerce periodical provider RoweCom Inc. Tuesday snatched up global news aggregator NewsEdge Corp. in a $227 million stock deal.

RoweCom (ROWE), which will exchange .26 shares of common stock for each share of NewsEdge stock, said the purchase will create a comprehensive e-media news, information and services environment.

The combination of RoweCom and NewsEdge (NEWZ) will facilitate the emergence of RoweCom's next-generation of information management solutions in e-commerce.

RoweCom will offer its clients timely business, technical and political news from hundreds of sources, organized into thousands of topics of interest integrated from NewsEdge into RoweCom's Knowledge Store (kStore) service. Conversely, links within NewsEdge stories would provide immediate access to related kStore offerings including more than 200,000 magazines and journals, 5,300 electronic journals, as well as millions of books via RoweCom partner barnesandnoble.com (BNBN).

"The deluge of information on the Internet has proven to be too much for the average business person to sift through efficiently and effectively," said Don McLagan, NewsEdge's chairman and CEO.

"Together, RoweCom and NewsEdge solutions will help our clients solve the twin problems of information overload and information overlook. Our clients and shareholders alike will benefit from the synergies created by the combination of our two companies."

Perks of the deal for RoweCom include:

  • Expanded Market Share -- RoweCom would instantly add 1,000 new corporate clients to its global client base and over 650,000 new business end users, at a cost lower than that of organic growth via sales efforts.
  • RoweCom would leverage NewsEdge's large enterprise sales team of nearly 100 individuals, who are dedicated to promoting the company's many services and products to new accounts as well as servicing and up-selling to existing ones. The company's solution-based sales method focuses on meeting the individual needs of each of its clients
  • Deepened Content -- RoweCom intends to offer its clients access to news and current awareness services from the NewsEdge Refinery. The NewsEdge Refinery enhances news value for clients by normalizing content structure and adding metadata to stories making the news easier to search

A first mover in business-to-business e-commerce, RoweCom Inc. formed a partnership with barnesandnoble.com in September in which it would share a single, Web-based interface with the book behemoth. Through this portal, companies have access to reporting options including daily sales, product activity and traffic figures.

Customers using the RoweCom system can save 5 to 7 percent on their periodicals orders. In RoweCom's system, the client library uses RoweCom-developed software to request a subscription, which travels over the Internet to a Banc One server. The server then forwards order information to the publisher and payment information to Banc One, which provides the automated clearinghouse piece.

Because RoweCom's costs are 75 percent less per subscription than those of a traditional service agency, it can charge its customers a low flat fee, part of which is passed to Banc One. Banc One, in turn, pays OpenMarket, which handles security and other technical issues.