What's the value of the word "dictionary"? Try $100 million. That's the price Answers Corp., creator of Answers.com, says it is paying in cash to acquire Lexico Publishing Group, owner of Web
properties Dictionary.com, Thesaurus.com and Reference.com.
The acquisition combines two of the top players in the reference market--and the combined properties, according to
Hitwise, would rank second behind Wikipedia.
Lexico attracted approximately 11.5 million unique monthly users in the U.S. during the month of June 2007, according to comScore Media Metrix. In
2006, it generated revenues of $7 million, EBITDA of $2.9 million, and net income of $2.8 million.
The acquisition is expected to close by fall.
Lexico's Web properties generate roughly
three times the total page views of Answers.com and monetize at about one-third the rate of Answers.com.
More than 85% of Lexico's traffic is direct from end users or people searching
specifically for the term "dictionary" in search engines. The resulting shift in traffic mix should significantly reduce Answers.com's current reliance on search engine algorithms, the company said.
Based on the June 2007 comScore data, the addition of Lexico's Web properties will increase Answers' reach to more than 22.5 million monthly unique users, which would rank 28th in the top U.S.
properties.
"The acquisition of Lexico is a transformative event for us," said Robert S. Rosenschein, chairman and CEO of Answers Corp. in a statement issued after the New York market close on
Monday. "We are excited about applying our experience in monetization to significantly increase Lexico's 2008 revenues and EBITDA. Lexico's suite of popular brands, steady direct traffic and loyal
users are valuable assets that we believe will reduce our products' reliance on search engine-driven traffic.
"Post-transaction, we estimate that over 70% of our total traffic will now be direct
from end users or people searching specifically for the term 'dictionary' in search engines. Our combined size and available ad inventory should provide greater exposure among online media buyers,
which we expect will lead to increased advertising sales."
In addition to the monetization possibilities, the deal will allow Answers to cross-promote its properties such as WikiAnswers to the
Lexico's 11.5 million monthly unique users.
Dictionary.com and other Lexico properties will remain stand-alone brands.
RBC Capital Markets is advising Answers Corporation; Montgomery & Co.,
LLC, is advising Lexico Publishing Group, LLC; REK Partners, LLC, is advising Daniel Fierro, Co-Founder of Lexico.