Engage Technologies, CMGI‘s flagship advertising company, on
Thursday acquired ad networks Flycast Communications and AdSmart, which are both also
majority-owned by CMGI (CMGI), in a stock deal worth $2.5 billion.
Engage (ENGA)
will issue 32 million shares, which were
trading at $77 at Wednesday’s close, to acquire the two companies from
CMGI.
The deal represents CMGI’s consolidation of the advertising-related
properties in its portfolio, in an attempt to create an integrated
powerhouse to compete with, and, it hopes, surpass, market leader DoubleClick.
“The first generation ad networks and there is one out there that’s a big
player should really stand up and notice that the next generation is
here,” said Paul Schaut, CEO of Engage, who will continue to head the
combined company.
Joining Schaut in crafting company strategy will be George Garrick,
chairman and CEO of Flycast, and John Federman, president and CEO of
Adsmart. The three will together fill the office of president.
The companies plan to integrate their sales forces, which will number
around 200 people, and will put all of their respective technologies
together and mix them up. What will emerge, in terms of brand names or
products, is still being formulated.
What is sure, though, is that the
Engage profiling technology, which company referred to as the “special
sauce” in the recipe, will be liberally spread throughout the product mix.
“When we announced the acquisition of Flycast last September, we
highlighted the complementary nature of these businesses, and today we have
begun to fulfill our larger vision for a single, highly integrated Internet
marketing company that represents the next generation in online marketing
solutions,” says David Wetherell, chairman and chief executive officer of CMGI.
“By combining the strengths of these three business models, Engage is
creating a new entity that will redefine how online marketing is done, well
beyond what we see today.”
Engage brings the customer profiling piece to the deal, AdSmart the
high-end ad network with 415 brand name sites, and Flycast the lower-end,
direct-response ad network of 1900 sites.
Engage also has two subsidiaries to add to the mix — AdKnowledge, which provides Web
marketing management services, and I/PRO, a provider of Web traffic
verification, measurement and analysis, and research.
Although CMGI also owns majority stakes in AdForce, and yesmail.com, the company says it has no
plans, at the moment, to further consolidate these holdings.
However, all
of the CMGI companies will work together. Flycast, which recently began to
focus on e-mail solutions, has already started talking with yesmail.com
about integrating their e-mail marketing services. Engage also already has
partnerships with AdForce and yesmail.com.
“We are looking at the best ways to leverage these properties in
combination with the new Engage,” said Wetherell.
Midday trading saw shares of Engage soar more than 23 percent to 94 7/8 from Wednesday’s close of $77.
