Yahoo! has agreed to purchase online advertising company Overture in a deal worth over £1 billion.
The agreement will see Overture become a wholly owned subsidiary of Yahoo!, which will take-over as the largest global player in the rapidly expanding search targeted marketing sector.
Overture’s chief executive, Ted Meisel, will continue to head up the company’s operations and will report to Yahoo!’s chief operating officer, Dan Rosensweig. It is expected the transaction will be completed by the end of 2003, subject to the approval of regulatory bodies and Overture’s stockholders.
Commenting on the acquisition, Terry Semel, chairman and chief executive of Yahoo!, said: “Together, the two companies will be able to provide the most compelling and diversified suite of integrated marketing solutions around the globe, including branding, paid placement, graphical ads, text links, multimedia, and contextual advertising.”
Ted Meisel, president and chief executive of Overture, added: “Overture pioneered commercial search, and we believe there remains huge upside potential in this market. By combining the assets of Yahoo! and Overture, we believe the company will be strongly positioned to take advantage of this growth opportunity by more rapidly developing and deploying innovative search and marketing solutions.”
Search is a central part of Yahoo!’s business strategy and the acquisition of Overture will allow the group to offer a complete package to advertisers. It is also hoped the acquisition will give Yahoo! greater expertise and flexibility in its search offering through a variety of brand synergies.
Yahoo! and Overture plan to expand their combined products and services internationally to create a unique global marketplace. They also plan to take pay-for-performance search into new areas, such as shopping, travel, and directory services, whilst continuing to build on Yahoo!’s contextual advertising platforms. Overture is also to leverage its market position by encouraging its 88,000 advertisers to purchase Yahoo!’s services.
Susan Decker, chief financial officer at Yahoo!, said: “We are excited about the opportunities the combined companies create to enhance our ability to drive long-term free cash flow to our stockholders. Together, we believe we can gain a larger share of the rapidly growing advertising segment while also generating increased returns for Yahoo!’s advertisers and affiliates.”
Yahoo! estimates the global search market will grow from approximately £1.2 billion by the end of 2003 to over £3 billion by 2006, an annual growth rate of about 35%.
