Yahoo! Inc. today announced it would buy
GeoCities Inc. for $4.58 billion in a deal that creates the largest
Web gateway and speeds the fevered spree of consolidations among
Internet companies.
The terms represent a substantial premium over GeoCities'
current market valuation of about $3.02 billion including
outstanding stock options.
Yahoo! is a Web search and directory service based in Santa
Clara, Calif., and already has a minority investment in GeoCities,
a Santa Monica, Calif., company that hosts Web pages created by
individuals.
The deal would give Yahoo! another powerful brand name while
helping Geocities reach more Web users. The combination of Yahoo
and GeoCities traffic could vault it to the No. 1 spot in terms of
Internet traffic, according to figures from Media Metrix Inc., a
research firm.
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. 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. for about $4.2 billion.
On the NASDAQ Stock Market, GeoCities stock closed Wednesday at
a new high of $75 a share, up $4 from the previous close. It has
traded as low as $13.25 over the past year.
