CMGI buys Flycast in stock swap

What isn't CMGI, Inc. (Nasdaq: CMGI) buying these days? CMGI has reeled in another Internet catch with Flycast Communications Corp. (Nasdaq: FCST).

CMGI, which now owns about 50 companies, said Thursday it will buy Flycast to round out its growing collection of advertising services. Flycast announced separately today that it expects to beat estimates for its upcoming third quarter results.

Shares in Flycast, which provides web-based direct response advertising software, closed at 38 Wednesday. Shares in CMGI leapt 1 11/16 to 102 in intitial trading Thursday, and have been surging lately, especially since it announced earnings Monday.

According to the terms of the stock-for-stock merger, CMGI will issue .4738 CMGI shares for every share of Flycast held on the closing date of the transaction. A significant percentage of Flycast shareholders have agreed to vote in favor of the merger. CMGI and Flycast have also entered into an agreement where CMGI has an option to purchase up to 19.9 percent Flycast if the merger is terminated.

The deal is the latest in a string of acquisitions designed to help CMGI strengthen its interactive marketing and advertising properties. The compnay just bought Adforce on Sept. 20.

According to CMGI, Flycast represents a critical segment of CMGI's advertising strategy, adding direct response software, which is built on a network model of inventory from large numbers of sites. CMGI plans to leveraging Flycast's capabilities with its other advertising holdings, such as Adsmart, AdForce, and Engage (Nasdaq: ENGA).

Flycast's flagship offering, the Flycast Network, serves 1.4 billion ad impressions per month on 1,200 sites, reaching more than 25 million people a month.

Flycast said Wednesday that it expects its loss for the third quarter ending Sept. 30, to be less than the 56 cents a share loss predicted by First Call's consensus.

For the quarter, Flycast expects to report total revenues of between $11 and $12 million, which represents more than 70 percent growth over revenue of $6.4 million recorded in the prior quarter. Flycast's year-to-date revenue through the first three quarters of 1999 will exceed $22 million, compared to $3.9 million for the first three quarters of the prior year, according to the company's statement.