After much speculation, Yahoo! Inc. Thursday announced it will
acquire homesteading community site GeoCities, in a stock deal valued
at about $3.6 billion.
Terms of the agreement call for Yahoo! to issue 0.3384 shares of Yahoo!
common stock, equal to $113.66, for each share of GeoCities common stock.
All outstanding options of GeoCities will be converted into Yahoo! options.
Completion of the deal is slated for the second quarter of this year.
Yahoo! said it expects to take an unspecified one-time charge in the second
fiscal quarter of 1999 for acquisition expenses.
Upon completion of the merger, Yahoo! will exchange approximately
10,613,000 shares of Yahoo!
common stock for roughly 31,361,000 shares of GeoCities common stock. In
addition, Yahoo! will
convert approximately 8,945,000 GeoCities stock options into roughly
3,027,000 Yahoo! stock
options.
Founded in 1994, GeoCities boasts 3.5
million sites authored and hosted on its network. According to Web
measurement firm Media Metrix, GeoCities is one of
the top three individual sites on the Internet, with a combined home/work
reach of 33.4 percent, as of December 1998.
The companies said that with
the addition of GeoCities to the
Yahoo! network, their combined unduplicated home/work reach is projected to
surpass 58
percent, making it the second largest network on the Internet.
Santa Clara, Calif. -based Yahoo! claims more than 35 million unique
registrations for its global services, with 167 million page views per day
and was founded by Stanford University graduate students Jerry Yang and
David Filo in 1994. Yahoo! said that in tandem with GeoCities, it will
incorporate powerful editing tools and content published via personal
homepages in various services, including Yahoo! Clubs, Yahoo! Classifieds,
Yahoo! Shopping, Yahoo! Auctions and other areas. Yahoo! said GeoCities
will offer a strategic platform for distributing Yahoo! services to
GeoCities’ member community, such as shopping, communications, and
personalized services.
Tokyo-based SoftBank Corp. is a major stockholder in both companies, with a
30 percent stake in each network. In addition, SoftBank holds shares in
Ziff Davis, CyberCash and E*Trade Group.
Today’s news positions Yahoo! to more effectively compete with rival
portals, who have made significant merger/acquisition announcements
recently. @Home’s acquisition of Excite, America Online’s purchase of
Netscape Communications Corp., Compaq Computer Corp. planning to spin off
AltaVista, Disney and Infoseek and
NBC and Snap! are among the recent superportal
alliances.
“GeoCities has built the Web’s most popular and widely used community,”
said Tim Koogle, Yahoo’s chairman
and chief executive officer. “Through this acquisition, we are accelerating
our global leadership position by combining two of the Web’s strongest
brands and most heavily used services into one powerful offering.”
“We are thrilled to be joining the Yahoo! team,” said Tom Evans, president
and CEO of GeoCities. “This combination will allow us to accelerate our
offerings to GeoCities and Yahoo! users worldwide.”
