Yahoo Buys Taiwan's Biggest Portal

In a move aimed at strengthening its position in Asia, Internet bellwether Yahoo Inc. on Thursday unveiled an agreement to acquire Taiwan's leading portal provider Corp. in a stock-swap deal valued at US$146 million.

Under the terms of the agreement, Yahoo will issue 2.25 million new shares in exchange for all outstanding shares, options and warrants of privately-held Kimo, Yahoo said in a statement Thursday. The deal is expected to close before year's end, and Yahoo said it plans to merge Kimo with its Taiwan unit.

Based on Yahoo's closing share price of $65 at the end of Wednesday's trading on the Nasdaq exchange, the deal is valued at $146.3 million. Kimo's shareholders are also entitled to additional cash payments if undisclosed performance targets are met in the next year.

Although difficult to project, the additional payments could bring the total value of the deal to around $200 million, said O.F. Warren Law, Kimo's chief financial officer.

"This is a win-win situation for both parties," said Law. "Yahoo is an international success story, and Kimo is a success in Taiwan."

The deal was announced a day after Kimo reported its first break-even quarter in the company's history. On Wednesday, Kimo announced revenue of NT$97.25 million (US$3.03 million) for its third quarter, ended Sept. 30, an increase of 208 percent over the corresponding period a year ago. Advertising sales made up 89 percent of total revenue, with electronic commerce proceeds accounting for the remaining 11 percent, the company said in a statement.

"It's only when you are good that they want you," said Law. "It's very difficult to control costs in this business, but we have managed to keep a lower head count than most of the portals you see in Taiwan."

Yahoo may have chosen an opportune moment to acquire the Taiwanese portal, which earlier had announced an aggressive expansion plan that included a push into China. As elsewhere in the world, however, Internet companies in Taiwan are finding it harder to secure funding for such plans.

Kimo had also planned to launch an initial public offering in Taiwan to raise funds, but was forced to put those plans on ice as the Taiwanese market has floundered in recent months, said one Taipei-based analyst at a foreign securities broker who requested anonymity.

"There was no way they could have launched that IPO in the next three to six months, so they needed a strong partner," the analyst said. "The deal was not that great from Kimo's point of view, but they really didn't have much choice."

Kimo had around 4.7 million registered users at the end of August, with 27.4 million average daily page views, according to company information.

In addition to its main Chinese-language Taiwan portal, Kimo also operates another Chinese portal using the traditional character set aimed at Hong Kong users. Another version of the portal features the simplified character set used in China, and Kimo also has an English-language portal.

Founded in 1997, Kimo is 85 percent owned by Sysware Corp., a unit of Taiwan-based systems integrator Systex Corp.

Yahoo, in Santa Clara, California, can be reached at +1-408-731-3300, or via the Web at, in Taipei, is at +886-2-2365-9898, or at