The buyout represents another move by search engines to rev up their offerings and generate more profits in a cutthroat market. Excite said the deal will add "significant new revenue" this year, although it declined to elaborate.
The company's stock reached its 52-week high today, closing at 37-1/2, up 4 from yesterday's close.
MatchLogic generated more than $4 million in revenue last year.
In March, Excite said it would begin using MatchLogic to provide advertising services on its Excite and Webcrawler search engines. Excite said the service will provide its advertisers with "the best ad measurement and targeting solutions."
According to Pete Estler, chief executive of MatchLogic: "We help advertisers deliver the right ad, to the right person, at the right time."
Advertising is the lifeblood of free Web sites such as Excite, so the companies always are looking for ways to maximize those revenues. Excite's search directory competitors, such as Yahoo, Lycos, and Infoseek are pursuing the same strategy.
Financial terms of this deal, announced before today's stock market opened, call for Excite to exchange about 3.2 million shares of its stock for all of MatchLogic's stock.