CNET To Acquire ZDNet

Online media company CNET Networks, Inc., which provides information on tech products, news, and television programming, has agreed to acquire Ziff-Davis’ tech news site ZDNet for $1.6 billion (US$) in stock.

CNET will also absorb Ziff-Davis’ Computer Shopper, a business-to-consumer technology publication, and Smart Planet, an online educational service focused on the technology industry.

The San Francisco, California-based CNET will exchange 0.59 shares of each of Ziff-Davis’s 85 million shares. Based on CNET’s 4 p.m. stock price of $32.19 Tuesday, the transaction is valued at $1.6 billion.

Management Team To Merge

The transaction is expected to be completed in the fourth quarter. CNET Chief Executive Officer Shelby Bonnie will remain at the helm of the combined company, while Ziff-Davis CEO Dan Rosenweig will become president. CNET President Rich Mario will become the chief operating officer.

Additionally, Softbank Corp. of Japan, which owns more than 50 percent of the New York-based Ziff-Davis, said it supports the deal and will end up owning a 17 percent stake in the new entity.

Worldwide Presence

As a result of the acquisition, CNET will gain a significant presence in 25 markets throughout Europe, Asia, Latin America and North America, according to CNET officials. Currently, CNET global holdings consist of eight Web properties in the Asia-Pacific region.

The acquisition is also expected to add earnings to CNET, as well as increase its workforce to 1,600 employees. The new entity is expected to produce more than $500 million in revenue in 2001.

Third Major Acquisition

CNET bought 10 companies last year, and has added three deals to its tally in 2000. In February, the company decided to buy privately held online comparison shopping company mySimon, Inc. for approximately $660 million in stock.

Based in Santa Clara, California, mySimon’s Web site offers online comparison shopping for a wide range of products. The deal allowed CNET to instantly expand its content into 250 categories, with thousands of products and more than 2,600 merchants and advertisers. At the time, CNET claimed the marriage would expand its reach to 10 million unique users.

Honing E-Commerce Focus

Many industry observers felt that the mySimon acquisition underscored CNET’s desire to transform itself into a full-fledged e-commerce player. However, CNET’s past attempts to broaden its cyber-presence have not always been successful. Just recently, CNET’s online portal experiment with Snap.com ended after the company found it difficult to compete with Yahoo! and other rivals.

The company decided to fold Snap.com into broadcast network NBC’s new Internet venture, of which it now owns 14 percent. Last week, CNET announced that it acquired closely held Apollo Solutions for about $10 million.

Ziff-Davis recently spun off its events business, which included Comdex, one of the world’s largest technology fairs, NetWorld+Interop and Seybold Seminars.