Overture to buy AltaVista for US$140 million

Overture Services Inc. has agreed to acquire search technology company AltaVista Co. for US$140 million in cash and stock, the companies announced last week.

Overture offers a service in which companies place bids to have their advertisements displayed among search results at sites operated by Yahoo Inc., Microsoft Corp.’s MSN unit and others. Buying AltaVista will help Overture to enhance those commercial services, the company said in a statement.

Overture also has its eye on the AltaVista Web site, which it will use to test out new search products and marketing services for its advertisers in a “live” setting, the company said.

Subject to customary approvals and “certain other conditions,” the purchase is expected to close in April and be accretive to Overture’s earnings by mid-2004, the company said. The company will pay for AltaVista with Overture common stock currently valued at US$80 million plus US$60 million in cash.

AltaVista’s search technology uses algorithms to crawl the Web and track down results for end users. The company offers “paid inclusion” services that ensure that business’ Web sites are included in the results. Overture said it plans to enhance those services.

AltaVista, established in 1995, was a pioneer in Internet search technology. With headquarters in Palo Alto, Calif., it has about 250 employees worldwide and offers search results in 25 languages. AltaVista is a majority-owned operating company of CMGI Inc.

The company has faced increased competition from popular upstarts such as Google Inc., and in November it revamped its service with new search tools for consumers and new marketing opportunities for businesses.