NEW YORK: Yahoo Inc. is buying the rest of Right Media Inc. for about $680 million, hoping to strengthen its advertising services business. It has agreed to buy the remaining 80 per cent holding in the company it did not own.
Yahoo had acquired a 20 per cent stake in the New York-based company in October 2006.
Under the current deal, shareholders of the company will get almost equal parts in cash and stock. Yahoo will also take responsibility for Right Media's employee stock option plan and other equity awards schemes.
Right Media operates an advertising exchange catering to banner ads and other ad formats, which allow web publishers to sell advertising slots, targeting non-traditional websites. By acquiring the company, Yahoo, which now is a market leader in display advertising of large brand name owners, is trying to improve its position in this market. It will make use of the platform to target small audiences and social networking sites.
By taking control of Right Media, Yahoo is also trying to counter the influence of rival Google, which has established a dominating position in the pay-per-click advertisements that appear in web search results. Google has recently acquired DoubleClick, a major advertising network catering to websites which get less traffic. Google paid for $3.1 billion for DoubleClick.
Right Media is known to have some 20,000 advertisers, publishers and networks using its online advertising exchange. Yahoo said it will now increase its participation in the exchange as a buyer as well as as a seller.
Yahoo has recently entered into advertising alliances with online shopping site eBay and a group of U.S. newspaper publishers. The company's chairman Terry Semel said alongside these partnerships and its company-owned websites, the Right Media deal will represent the "third leg of the stool" for Yahoo as an advertising company.
He said the acquisition is a key step toward executing the company's long-term vision to build the leading advertising and publisher ecosystem both on and off the Yahoo network.
