Portal giant Yahoo! is shelling out $579 million in cash to buy European comparison shopping site Kelkoo and establish a firmer foothold in the region.

Kelkoo has operations in nine countries, works with more than 2,500 merchant advertisers, and reaches nearly 10 percent of all European Internet users, according to the companies. It operates a network of country-specific sites and distributes its listings through partnerships with MSN; EasyValue; ANM's Femail and ThisisLondon; Telewest's Blueyonder; and Eurosport.

Kelkoo's model is similar to that of U.S.-based Shopping.com, or Yahoo!'s own shopping operation. Merchants list their products for free, but pay a per-click fee (which varies by category) when customers are referred to their sites. The acquisition fits with Yahoo! Shopping and its Overture paid listings company, both of which allow marketers to pay per-click for referrals.

Yahoo!'s operations in Europe comprise sites for the United Kingdom and Ireland, France, Germany, Italy, Spain and Catalan (a section of Spain with its own dialect). Kelkoo operates in Belgium, France, Denmark, Germany, Spain, Italy, the Netherlands, Norway, and Sweden.

"Kelkoo will add depth and breadth to Yahoo!'s integrated network of services for consumers, and adds another set of powerful tools for marketers seeking to reach them," said Terry Semel, Yahoo!'s chairman and CEO, in a statement.

The companies say they plan to combine Kelkoo's online shopping expertise and product search capabilities with Yahoo!'s network and its Web search. Overture's paid listings capabilities are also expected to play a role. Kelkoo has long had an agreement with Overture competitor Espotting, which has placed contextual listings on its sites.

Comparison shopping has become one of the hotter areas of Internet marketing, combining elements of the hot search space with elements of e-commerce. U.S.-based Shopping.com, formed from the merger of DealTime and Epinions, earlier this week filed for an initial public offering, hoping to raise up to $75 million.

Kelkoo was founded in France in November 1999, and has since grown through merging or acquiring several companies in the UK, Spain, Norway and France. It's annual revenue in 2003 was around $52 million, an increase of around 180 percent from 2002's $19 million. The bulk of the income comes from the United Kingdom, which generated more than 40 percent of the group's total revenue.

The company has 250 employees, the company said, and its not expected to reduce its workforce as a result of the acquisition. Kelkoo CEO and founder Pierre Chappaz will continue to lead Kelkoo's operations and will report to John Marcom, senior vice president of international operations at Yahoo!.

The deal is expected to close during the second quarter of 2004.