In an indication that Engage has
resources for cash other than the public markets, CMGI Inc.’s flagship advertising company on
Tuesday rounded up $75 million in new financing from its parent and
from computer maker Compaq Computer Corp.
will issue around 5
million shares of common stock to CMGI
in return for investments of $50 million and $25 million
respectively. The deal is based on a five-day average closing price of
Engage stock ending with Monday’s 15-3/8 close.
Engage, which recently swallowed two of its sister firms and last week
acquired MediaBridge in a $268 million stock deal, says it will use the new
money to fund continuing operations. The deal puts Engage on more solid
ground, financially, at a time when other firms — like CMGI’s AltaVista —
have had trouble getting IPOs out.
When Engage reported results last week, it said it had $48.5 million in
cash and cash equivalents on hand as of April 30. The company, as of April
30, had $90.3 million of cash, cash equivalents and marketable securities.
The new investment from CMGI and Compaq arises from the pact between the
two companies forged in August 1999. At that time, CMGI acquired a
majority interest in AltaVista Co. from Compaq, and the computer giant became
the largest outside shareholder in CMGI. The companies also pledged to work
together in the Internet space, and have pursued various deals that
benefited both firms.
“The expansion of our strategic relationship with CMGI and Compaq signifies
continued validation of our business strategy,” said Paul Schaut, president
and chief executive officer of Engage.
“These commitments will help us continue the execution and expansion of our
business strategy to deliver the power of the Internet through higher ROI
to marketers into 2001.”