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Yahoo buys Chinese software firm

The portal giant will pay about $120 million in cash over two years to acquire 3721, a Hong Kong-based company that develops software for Internet keyword searches.

Yahoo on Friday said it is acquiring 3721 Network Software in an effort to expand its presence in China's rapidly developing Internet market.

As previously reported, Yahoo will pay about $120 million in cash over two years to acquire 3721, a Hong Kong-based company that develops software used for Internet keyword searches. 3721 will become a wholly owned subsidiary of Yahoo Holdings (Hong Kong).

Under the deal, Yahoo will take control 3721's Beijing operations, which it considers central to tapping revenue from local small- and midsize businesses.

"The agreement provides outstanding and complementary personnel and technology to support and grow current Internet needs across China and Asia," Allan Kwan, managing director for Yahoo in North Asia, said in a statement.

Yahoo expects the acquisition to close in the first quarter of 2004.

3721 sells Chinese-language keywords for Roman-alphabet domain names. The idea is to make it easier for local Web users to find their sites by typing Chinese-language terms into their search bars.

The company sells software people can install into a Web browser to enable the Chinese keyword service. It charges $115 a year for specific company names and $1,300 a year for broader category names such as "laptops" or "restaurants." The company partners with local Web portals that support the software on their Web sites.

Selling search-related services has been a priority for Yahoo. Earlier this year, the company acquired search technology provider Inktomi for $235 million and then bought paid search company Overture Services for $1.63 billion, two deals aimed at generating more revenue from search.