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Yahoo Targets Arab World With Maktoob Purchase

Yahoo has made a taken a major step to boost its global presence, this morning unveiling the purchase of Maktoob.com, an online hub serving the Arab world that boasts more than 16.5 million users.

"This will be Yahoo's biggest geographic expansion in years," Keith Nilsson, Yahoo's senior vice president of emerging markets, wrote this morning in a post on the company's blog.

Nilsson said the buy is about expanding Yahoo's (NASDAQ: YHOO) presence in developing areas where Internet usage is soaring. Maktoob reaches one in three Internet users in the Arab world, but the potential reach for Arabic content is much larger. In the Middle East alone, even after a tenfold increase in Internet usage since 2000, Yahoo said that most markets are still "developing."

"This deal is part of Yahoo's broader strategy to grow our international business, particularly in emerging markets," Nilsson said. "In many countries, vast populations -- and advertisers -- are just starting to come online. The potential is tremendous."

In the Middle East alone, Yahoo said it is looking for online ad spending to grow between 35 percent and 40 percent this year, citing a figure from Madar Research.

Through the acquisition of the portal, Yahoo will throw its weight behind Maktoob's production of local content in Arabic, while offering Arabic-language versions of its Webmail and instant messaging services.

Yahoo also plans to roll out an Arabic version of its search engine and home page, which would be tailored with locally relevant content. Nilsson said Yahoo would eventually roll out Arabic versions of its popular verticals such as news, finance and sports.

Yahoo's strategy to build a community in the Arab world around its online content supported by targeted display advertising mirrors its efforts both in other emerging markets a well as in the United States. The company's Singapore-based emerging markets division has been making similar forays into areas like Latin America, Africa and Southeast Asia. After striking its recent deal with Microsoft (NASDAQ: MSFT), the company unmasked its intention to double down on what it felt it does best: selling ads alongside compelling Web content, much of which is created by Yahoo's own editorial teams.

The bulk of Maktoob's users reside in countries in the Middle East such as Egypt, Jordan, Kuwait, Saudi Arabia and the United Arab Emirates, where the company is based.

Nilsson said that Yahoo plans to deploy locally based editorial staffs to the countries Maktoob serves to bolster its efforts to develop content that caters to the nuances of a highly complex region.

The transaction is expected to close in the fourth quarter of 2009. Financial terms were not disclosed.