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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.

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