Yahoo! To Buy GeoCitiesBy DAVID KALISH
NEW YORK (AP) -- Yahoo! Inc. [Nasdaq:YHOO - news] is buying GeoCities Inc. for $4.58 billion in stock, creating the world's largest Internet search and directory service.
The deal announced today would give Yahoo! another powerful brand name while helping Geocities reach more Web users. The addition of GeoCities' Internet traffic makes Yahoo the No. 1 gateway to the World Wide Web, according to figures from Media Metrix Inc., a research firm.
``We anticipate maintaining GeoCities as a stand-alone, very very strong brand. There's a lot of brand equity in this company,'' said Tim Koogle, chief executive officer of Yahoo!
The terms represent a 52 percent premium over GeoCities' current market valuation of about $3.02 billion, including outstanding stock options.
Yahoo!, based in Santa Clara, Calif., already has a minority investment in GeoCities, a Santa Monica, Calif., company that hosts Web pages created by individuals.
Dealmaking has accelerated recently in the Internet business even as the stock market has pushed the prices of many Internet companies to new highs.
At Home Corp. agreed last week to buy Yahoo competitor Excite Inc. (Nasdaq:XCIT - news) in a deal valued at $6.7 billion at the time of the announcement. America Online Inc. agreed last fall to buy Netscape Communications Corp. [Nasdaq:NSCP - news] for about $4.2 billion.
Under the terms of the deal announced today, Yahoo will exchange about 10.6 million shares of its stock for the 31.4 million shares of GeoCities common stock. In addition, Yahoo will convert about 8.9 million GeoCities stock options into about 3 million Yahoo stock options.
Yahoo's stock closed Wednesday at $335.87 1/2 a share on the Nasdaq Stock Market, where GeoCities ended the day at $75 a share.
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