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Tuesday, July 17, 2007

Answers Corp. to Acquire Dictionary.com for $100 Million

Answers Corporation , creator of Answers.com(TM), announced yesterday that it has entered into a purchase agreement to acquire Lexico Publishing Group, LLC, owner of the popular Web properties Dictionary.com, Thesaurus.com and Reference.com, for $100 million in cash. The transaction is subject to financing and customary closing conditions and is scheduled to be completed by fall of this year.

Lexico is a leading online provider of reference products and services, which attracted approximately 11.5 million unique monthly users in the U.S. during the month of June 2007, according to comScore Media Metrix.

Lexico is a highly profitable company that strongly complements Answers' user base. In 2006, it generated revenues of $7 million, EBITDA of $2.9 million and net income of $2.8 million. This strategic acquisition drives Answers to a leadership position in online information publishing.

Key benefits of the acquisition include:
  • Page Views: Lexico's Web properties currently generate approximately three times the total page views of Answers.com.
  • Monetization: Lexico's Web properties currently monetize at approximately one-third the rate of Answers.com, presenting material revenue upside.
  • Direct Traffic: Over 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.
  • Market Leadership: Based on the June 2007 comScore data, the addition of Lexico's Web properties will increase Answers reach to over 22.5 million monthly unique users, which would rank #28 in the top U.S. properties.
Dictionary.com and other Lexico properties will remain standalone brands, as they are today. From a competitive standpoint, the acquisition combines two of the top players in the reference market. According to Hitwise, a leading competitive research firm, in June 2007 the Lexico sites ranked #3 in "Education-Reference" and the Answers sites ranked #4, out of nearly 4,000 sites included in the category. The combined properties would rank #2, behind only Wikipedia.

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