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News Corp. to buy Intermix for $580 million

Purchase comes after Intermix settles a New York lawsuit accusing it of distributing spyware.

News Corp. will spend $580 million to buy Intermix Media--which recently settled a lawsuit accusing it of distributing spyware.

News Corp., a movie studio and television conglomerate, said the move is an effort to expand its Internet offerings. It will pay $12 a share, a 12 percent premium over Intermix's closing price on the American Stock Exchange on Friday.

Intermix's holdings include Internet network MySpace.com and gaming and entertainment site Grab.com. It also has an Internet marketing unit called Alena.

The company, which had revenue of $24.1 million in its fiscal fourth quarter, will become part of News Corp.'s newly created Fox Interactive Media, which holds the company's sports, news and entertainment Web sites. News Corp. said Friday that it plans to make "strategic investments" in this area.

Intermix was the target of a lawsuit earlier this year by New York State Attorney General Eliot Spitzer, who accused the company of false advertising and deceptive business practices in bundling hidden spyware that delivered pop-up advertising and redirected Web traffic to an Intermix search engine.

Intermix agreed to pay $7.9 million to settle the suit, without admitting wrongdoing. The company had previously stopped distributing such programs.

The News Corp. deal is expected to close in the fourth quarter.

Intermix's largest shareholder, VantagePoint Venture Partners, which holds a 22.4 percent stake in the company, has agreed to vote its shares in favor of the transaction, News Corp. said.