Yahoo to buy Overture for US$1.63 billion

Yahoo Inc. said Monday that it is scooping up paid search service provider Overture Services in a US$1.63 billion deal expected to ramp up competition in the search market.

Pasadena, California-based Overture is one of the leading commercial search providers, counting more than 88,000 advertisers in the first quarter of the year. Yahoo said that with the acquisition, it hopes to fill out its search offerings, including pay-for-performance search, and tap into Overture's client base to sell advertising and online marketplace services.

In February, Overture agreed to acquired search technology company AltaVista Co. for US$140 million, and those assets are now expected to fall into Yahoo's hands as well.

The Sunnyvale, California, Internet company has been committed to bolstering its search offerings, having also recently acquired Web search technology company Inktomi Corp. for $235 million.

Yahoo said that commercial search is one of the fastest growing segments of the Internet advertising market. Citing figures from Piper Jaffray, Yahoo said that the market is expected to grow from US$2 billion by the end of this year to $5 billion by 2006.

By bolstering its search services and technologies, Yahoo is hoping to become a leading player in the market, taking on search titan Google Inc.

The Overture buy is subject to custom closing conditions, including regulatory approval, Yahoo said. If the deal goes through, Overture will be a wholly-owned subsidiary of Yahoo, which will continue to be headed by Overture President and Chief Executive Officer (CEO) Ted Meisel.

More about: Altavista, Google, Inktomi, Overture services, Yahoo

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