• by Adam Bernard , March 11, 2002

Internet ad firm ValueClick Inc. has said it would buy online marketing specialist Be Free Inc. for about $128 million in stock, expanding its array of Internet advertising services and products.

The merger aims to bring together ValueClick's and Be Free's array of online and offline technology and media services, which now encompass real-time third-party and publisher ad serving, CPM, CPC and CPA advertising, agency management software, affiliate marketing products and services, custom media solutions, customer retention and customer acquisition e-mail technology and services, and personalized recommendation technology.

By uniting the people and resources of ValueClick and Be Free, the combined company will have a worldwide sales force with domestic offices throughout the United States and international offices in Canada, the United Kingdom, Germany, France and Japan. With its collective operational and research and development expertise, the company hopes have the necessary infrastructure and resources to develop additional products and build market share.

Upon closing of the merger, company officials say that the combined company will have the financial strength of more than $270 million in cash and interest-yielding securities and annual revenue potential of $83 million, in line with ValueClick's previously announced 2002 revenue guidance of $60 million and Be Free's previously announced 2002 revenue guidance of $23 million.

Through cost efficiencies and operational synergies, management anticipates that the combined company will reach breakeven before non-cash and non-recurring charges in the fourth quarter of 2002, and that by the middle of 2003 savings from cost reduction activities will exceed $6 million on an annualized basis.

Be Free is just one of many recent buys for ValueClick, which has acquired five companies in the past two years, most recently Mediaplex, best known for its MOJO ad serving and eCRM technology, and AdWare Systems, a provider of agency management software. The successful integration of ValueClick and Be Free is expected to reap additional cost synergies in the media and technology arena.