NetZero Plans to Acquire
Simpli in Cash, Stock Deal
By SHARON CLEARY
WSJ.COM
SAN FRANCISCO -- NetZero
Inc. plans to announce Thursday that it agreed to acquire Web-search
start-up Simpli.com Inc. in a stock and cash transaction valued at $23.5
million.
Under terms of the deal, NetZero will issue 2.5 million shares of its
common stock to Simpli.com and $2.6 million in cash. Shares of NetZero
closed Wednesday at $8.375, up 37.5 cents.
Simpli, Providence, R.I., will become a wholly owned subsidiary of
NetZero. The acquisition is expected to be completed by the third
quarter.
NetZero, which has signed up about four million users since the
free-Internet provider's launch in October 1998, expects Simpli's
associative-search software will improve its targeted marketing and be part
of its e-commerce efforts. The technology will be used to personalize
users' start pages and closely focus advertising based on users' search
habits.
Simpli's software will be closely tied with NetZero's new CyberTarget
division, which provides marketers and advertisers with online market
research and measurement services.
"With Simpli.com's technology, we can personalize advertising and
content in a way no one else is doing on the Net," said Marc Goldston,
NetZero's chairman and chief executive. "Our goal is to have every message
to our users be targeted to their habits, and this [acquisition] moves us
way down the pike."
Simpli's software, dubbed SimpliFind, was created by a team of software
engineers, linguists and cognitive theorists from Brown University and
Massachusetts Institute of Technology.
Simpli was incorporated last spring and hasn't taken any venture capital
to fund its development, relying solely on angel investors and board
members' money -- meaning a bigger payoff for employees.
"We did it without taking one penny of venture-capital money -- and
we're making everyone, including a lot of professors, very happy," said
Chief Executive Jeff Stibel. Mr. Stibel, 26 years old, will stay on at
NetZero following the acquisition.
SimpliFind is built on a lexicon called WordNet, which was developed
over the past fifteen years by researchers at Princeton University. WordNet
is an effort by linguists and cognitive theorists to build a relational
dictionary that corresponds to the way language is understood by the human
mind: via context and association. Simpli's search tool is a practical
application of WordNet's associative capabilities.
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