Answers Corp found an entry for $100 million, and acquired Lexico Publishing Group…
Answers Corporation, creator of Answers.com is to acquire Lexico Publishing Group LLC, owner of the web site Dictionary.com, for $US100 million in cash.
The all-cash deal will bring Dictionary.com, Thesaurus.com, and Reference.com into the Answers fold. Answers announced the buy today and touted the boost in page views and monetization Lexico should deliver.
The New York-based company said its acquisition of closely held Lexico, the parent of the three sites, is subject to financing and customary closing conditions and is scheduled to close this fall.
According to Answers, “Lexico is a highly profitable company that strongly complements Answers’ user base. In 2006, it generated revenues of $US7 million, EBITDA of $US2.9 million and net income of $US2.8 million. This strategic acquisition drives Answers to a leadership position in online information publishing.”
“The acquisition of Lexico is a transformative event for us,” said Robert S Rosenschein, chairman and CEO of Answers Corporation. Lexico’s suite of popular brands, steady direct traffic and loyal users are valuable assets that we believe will reduce our products reliance on search engine-driven traffic.
We estimate that over 70% of our total traffic will now be direct from end users or people searching specifically for the term ‘dictionary’ in search engines,” said Rosenschein. Our combined size and available ad inventory should provide greater exposure among online media buyers, which we expect will lead to increased advertising sales, he said.
Answers says’ it intends to keep Dictionary.com and other Lexico properties as standalone brands. “The bottom line is, with [Lexico sites having] three times the traffic and one-third the monetization rate [of Answers sites], together with our monetization expertise, the upside potential is compelling,” said Steve Steinberg, Answers CFO.
“We will also offer cross-promotion to other Answers sites. For example, this acquisition will allow us to introduce our WikiAnswers property to Lexico’s 11.5 million monthly unique users,” said Steinberg.
They also cited comScore data from June 2007 that indicated the combined sites should reach 22.5 million Internet users.
Dictionary’s good fortunes come from its distinctive domain name. Answers chief strategic officer Bruce Smith cited a Hitwise survey from 2006 that found “dictionary” rated second for generic search terms people queried for online.
Answers claims to deliver comprehensive content on over four million topics spanning health, finance, entertainment, business and more. Content includes over 180 licensed titles from publishers such as Houghton Mifflin, Barron’s, Encyclopedia Britannica, All Media Guide and others; original articles written by Answers.com’s editorial team; community-contributed articles from Wikipedia; and user-generated questions and answers from its own wiki.answers.com. It was founded in 1999 by CEO Bob Rosenschein.
In that context, the Lexico deal looks a lot like Answers paid $100 million for the Dictionary.com domain, with the rest of the company tossed in as a bonus.
Shares were halted in late trading after dropping 7 cents to $12.94 in regular action Monday.