InfoSpace easily topped analysts' estimates in its second quarter Wednesday and announced it will pay a hefty premium to acquire Internet content aggregator Go2Net in a stock deal valued at more than $4 billion.
InfoSpace (Nasdaq: INSP) said after the bell it will issue 1.82 shares of stock for each outstanding share of Go2Net (Nasdaq: GNET), valuing Go2Net shares at $86.91 a share or 43 percent above its closing price of 60 9/16.
By the way, InfoSpace posted a second-quarter loss of $3.3 million, or 1 cent a share, on sales of $24.6 million.
First Call Corp. consensus expected the provider of Internet infrastructure services to lose 6 cents a share in the quarter.
Ahead of the merger announcement and earnings report, InfoSpace shares closed up 1 7/16 to 47 3/4 while Go2Net shares closed off 1 9/16 to 60 9/16.
"Today marks another historic milestone in the history of the rapid evolution of InfoSpace," said CEO Arun Sarin in a prepared release. "InfoSpace turns in another record quarter of rapid growth and announces the merging of two powerful entities to create the premier global company delivering the services that are fundamentally changing how people around the world communicate…"
The board of directors of both companies have approved the deal and expect it to close sometime in the fourth quarter.
The $24.6 million in sales marks a 252 percent improvement from the year-ago quarter when InfoSpace posted a loss of 2 cents a share on sales of $6.98 million.
In the quarter, InfoSpace's wireless sales surged 100 percent from the year-ago quarter. It exited the quarter with a backlog of more than $98 million for the next four quarters.
Company officials said the merger will help the combined companies to accelerate growth opportunities through product synergies, providing end-to-end services for companies looking to establish or expand their existing e-commerce capabilities.
With the addition of Go2Net's merchant base of 1.1 million, InfoSpace now has a combined merchant base of almost 2 million merchants.
InfoSpace shares moved up to a 52-week high of 138 1/2 in March after falling to a low of 9 3/16 in September.
The stock split 2-for-1 in April.
All 13 analysts tracking the stock rate it either a "buy" or "strong buy."
Analysts are expecting it to post a loss of 13 cents a share in the fiscal year.