Eyeing China, Yahoo! Buys Taiwan Portal

Yahoo! (Nasdaq: YHOO) said Thursday it had reached an agreement to buy Kimo, the top Chinese-language portal in Taiwan, for approximately $146 million (US$) in stock.

Yahoo! said it will combine Kimo with two year-old Yahoo! Taiwan to target Asia’s fourth-largest Internet market and create a base for future expansion into mainland China.

Although the Chinese government has twice in recent months published strict limitations for content companies that wish to operate in the country, many e-commerce firms continue to view the country’s 1.26 billion residents as one of the great future online opportunities.

“We have always thought the Taiwan Internet market was not only important by itself, but also important to greater China,” said Yahoo! co-founder Jerry Yang, a native of Taiwan.

Here, There, Everywhere

Yahoo! said the acquisition is part of a larger strategy to spread itself across Asia as a whole. In all, Yahoo! operates 24 international sites.

“This merger is proof of the importance we place on the international market,” said Yang.

Kimo is reportedly the most-visited site in Taiwan, recording about 25 million page views each day. The site, which has about 4 million registered members, focuses largely on local content.

Kimo also offers several features that might aid Yahoo! in a future push into China, including a Chinese-language search engine. The portal has only recently begun to dip into e-commerce, becoming an enabler of online transactions between members and advertising merchants.

Stock Exchange

Under the deal, Yahoo! will issue 2.25 million shares of its stock, which closed Wednesday at $65, to Kimo shareholders. Additional payments are possible if the combined site performs well.

Kimo is owned by Systex, a publicly traded Taiwanese computer company that saw its own stock soar as news of the merger hit. While the Taiwanese government must approve the deal, the companies involved expressed confidence it could be closed by the end of the year.

Kimo chief executive officer David Lu was appointed to head greater China operations for Yahoo! Lu said the Yahoo!/Kimo deal will enable the combined company to offer “new tools and programs to advertisers and merchants” and extend Kimo’s reach well beyond the island of Taiwan.

Prior to purchasing Kimo, Yahoo! had bought a small stake in and struck a content-exchange deal with the Internet venture of the China Times.

Barrier Busted

The latest announcement came on the same day that the major registrars of domain names said they would begin recognizing online addresses in Asian languages for the first time, breaking down a major language barrier on the Web.