In late afternoon trading, Onvia shares rose $1.69, soaring about 20 percent, to $10.13.
The move is an effort to widen its customer base and bolster its offerings. Onvia, an online exchange that lets small businesses buy anything from legal services to office supplies and furniture over the Web, said it will fold Zanova's suite of Web-based applications and Web site hosting services into its existing set of offerings.
Under terms of the deal, Onvia said it will buy Scottsdale, Ariz.-based Zanova for approximately 2.54 million shares of its common stock. Based on Onvia's closing stock price of $8.44 a share on Friday, the pending deal is worth roughly $21 million, the companies said in a statement.
Onvia, which enjoyed a successful public offering in early March has since seen a slump in its once high-flying stock, primarily because of the overall downturn in recent market conditions. To date, shares of Onvia have traded as high as $78 a share and as low as $4.12.
The company competes in a growing market against rivals such as DigitalWork. International Data Corp. expects small businesses to increase their e-commerce spending to $106.8 billion by 2002 from $6.2 billion in 1998. Despite steady growth in small businesses, the market for this target audience is largely untapped. Analysts have said that while more than 85 percent of the 7.5 million small businesses in the United States have PCs, many have not found an economically feasible way to move their businesses online.
Zanova, which helps small businesses register domain names, build Web sites and develop an e-commerce storefront, said once integration is completed with Onvia, its customers will automatically have access to the Onvia small business marketplace. The company is hoping to give its existing customer base additional avenues to conduct business over the Web.
Both companies' board members have unanimously approved the merger. The companies said they expect to complete the deal by next month.