CMGI To Acquire Flycast - InformationWeek

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CMGI To Acquire Flycast

Internet venture firm CMGI said today that it plans to acquire online advertising firm Flycast Communications Corp. in a stock deal valued at $690 million.

Flycast aggregates and sells ad space on a network of 1,200 small and medium-sized Web sites, serving up 1.4 billion ads a month for such customers as eBay and E-Trade.

The deal is the latest step in CMGI's strategy to build up its Internet advertising and marketing holdings. Earlier this month, the company acquired AdForce, a firm that delivers and measures online ad campaigns, for $500 million. Among its other Internet advertising investments are Engage Technologies, an online marketing and advertising company that last week scooped up Web marketing management firm AdKnowledge for $193 million.

The acquisition will help CMGI's companies better compete with DoubleClick, a dominant player in the online advertising market, says Michele Slack, an analyst with Jupiter Communications. According to Jupiter's estimates, the online advertising market is expected to grow to $11.5 billion by 2003. "A lot of companies are jockeying to position themselves for dominance in that space," Slack says.

The acquisition is expected to close in January and is subject to Flycast shareholder approval. The companies also made a stock-option pact, so if the deal does not go through, CMGI has an option to purchase up to 19.9% of Flycast's outstanding common stock.

Wall Street was receptive to the deal, as Flycast's stock jumped 7-1/2 points today to close at 45-1/2, while CMGI gained 2-3/16 to 102-1/2.

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