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AOL, Excite search for deal

America Online signs a deal with Excite to use the company's search engine and to sell its own search and directory service, WebCrawler, to Excite.

America Online (AOL) will let search engine vendor Excite (XCIT) do its Web crawling for them.

Under an agreement announced today, Excite will become the exclusive search engine and directory service for AOL.

Excite will purchase AOL's own search and directory service, WebCrawler, in a stock transaction worth $12.2 million based on the closing price of Excite shares Friday.

The deal will give AOL two million shares of Excite, doubling its stake in the search engine company to 20 percent. Excite stock traded as high as 10-1/4 per share today, before closing at 9-7/8--up 3-3/4 of a point from Friday.

The new branded search engine, "AOL Search powered by Excite," will appear on AOL in about 60 days, said Excite president and CEO George Bell.

Competition among search engines has been stiff for some time now, and the deal could signal a coming shakeout in that crowded field.

The alliance is designed to increase traffic for both sites' advertisers, as well as improve search content for AOL members, said company CEO Steve Case, who will take a seat on the Excite board of directors. The deal will also bring AOL a majority of the ad revenue.

According to a September report from PC-Meter, the combined market reach of WebCrawler and Excite, would be 44.1 percent--significantly higher than the current market leader Yahoo.