Yahoo Inc. said it plans to acquire online-advertising technology company Interclick Inc. in a deal valued at roughly $270 million.
Interclick designs tools to help marketers target online customers. Under the proposed deal, Yahoo is offering Interclick shareholders $9 a share, a 22% premium to the stock’s Monday close. The tender offer is expected to close early next year.
The acquisition is meant to help solve what has been a chronic problem for Yahoo: digital-ad sellers buying up ad space on Yahoo websites and selling it to advertisers for a much higher price. Yahoo has thus been losing out on tens of millions of dollars in revenue a year or more, industry experts say.
With interclick, Yahoo will have better data to understand what its ad space is worth and sell it for a higher price through an automated system, said Terence G. Kawaja of investment bank Luma Partners, one of interclick’s advisers on the deal.
Yahoo could potentially choose to cut out other ad sellers that have been benefiting at Yahoo’s expense, some industry experts say.
Yahoo generates around $600 million a year from selling ad space through automated systems, a person familiar with the matter has said.
The acquisition also gives Yahoo more executives to try to maximize the value of its ad space. Yahoo has been beset by a brain drain in recent years.
Interclick, which is based in New York City and was founded in 2006, had revenue of about $53 million in the first half of 2011.
The acquisition comes as Yahoo’s board is conducting a strategic review of the Internet company’s assets and conducting a search for a new chief executive.
Yahoo’s efforts towards a turnaround based on cutting costs and joining forces with Microsoft Corp. in search has yet to produce reliable sales growth. Disappointment with the effort culminated in September with the ouster of Chief Executive Carol Bartz. Chief Financial Officer Tim Morse stepped into the CEO role on an interim basis.
Third-quarter earnings from the Internet giant fell 26% as a continued revenue decline outpaced cost reductions.