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NetRatings grabs Jupiter for $71.2 million

The acquisition is expected to catapult NetRatings into the leading position in the Net measurement and research services industry, doubling its customer base.

NetRatings, which measures Web traffic, on Thursday said it agreed to buy rival Jupiter Media Metrix in a cash-and-stock deal worth about $71.2 million.

Milpitas, Calif.-based NetRatings and New York-based Jupiter, which have long been bitter rivals, expect the deal to catapult NetRatings into the leading position in the Internet measurement and research services industry. The company said it expects the acquisition, which had been rumored, will nearly double its customer base.

The new company will retain the NetRatings name. NetRatings said Bill Pulver, formerly president of ACNielsen eRatings.com, will become president and chief operating officer of NetRatings. Dave Toth will continue as CEO of NetRatings, and Jack Lazar will continue as chief financial officer. When the deal closes as expected in early 2002, Pulver will become CEO and president for the combined company and Toth will leave to pursue other interests, according to a company statement.

The deal follows Jupiter's struggle to maintain its market share after many of its dot-com customers went out of business. Over the last year, the company has laid off a large part of its staff and attempted to implement a costly merger between Jupiter Communications and Media Metrix. In addition, the company's shares have fallen below $1 on the Nasdaq Stock Market.

NetRatings also said Thursday that it agreed to buy the remaining 80.1 percent of ACNielsen eRatings.com, a company that measures Internet audiences, for about $16.4 million. ACNielsen eRatings.com was a joint venture 80.1 percent owned by ACNielsen and 19.9 percent owned by NetRatings. Under terms of that deal, which is nontaxable, NetRatings will issue 1.26 million shares to ACNielsen. Through the acquisition, NetRatings plans to consolidate eRatings.com international operations into one global brand.

The company, in partnership with Nielsen Media Research, provides the service Nielsen/NetRatings, Internet audience ratings. The brand will remain in tact.

NetRatings
Stock price from October 2000 to present.  
Source: Prophet Finance
NetRatings also said it agreed to lend Jupiter up to $25 million, subject to some conditions, replacing a credit arrangement between Jupiter and its chairman, Tod Johnson.

Under the terms of the deal, which is subject to Jupiter shareholder approval, NetRatings will purchase the outstanding shares of Jupiter at $1.95 per share, for an exchange fixed ratio of 0.149, based on the NetRatings closing price of $13.09. The transaction will be taxable to Jupiter stockholders.

The board of directors at Jupiter will be able to appoint one board member when the acquisition closes. The deal may dissolve Jupiter's patent infringement lawsuit against NetRatings.

Through this purchase, NetRatings will inherit about 700 customers from Jupiter. The two companies said they have about a 15 percent overlap in their customers.

NetRatings also said it expects slightly better third-quarter revenues and also sees losses being less than expected. Revenues were predicted to be between $5.1 and $5.4 million and the loss between 3 cents and 5 cents per share. The company announces earnings Monday.