CBS agrees to buy CNet for $1.75 billion
Associated Press
Wed May 14, 2008
NEW YORK - CBS agreed to buy online technology news and entertainment company CNet Networks Inc. for about $1.75 billion, expanding its access to the burgeoning Internet advertising market.
The New York-based owner of the CBS television network said Thursday it offered $11.50 per share for San Francisco-based CNet, whose board accepted it. The bid is a 45 percent premium above CNet's closing price of $7.95 on Wednesday.
CNet shares soared on the news. The transaction is subject to approval by CNet shareholders and regulators.
CBS said the deal will boost its online presence and allow it to tap the rapidly expanding market for online advertising. CNet's Web sites include News.com, TV.com, Mp3.com, MySimon and GameSpot.
The acquisition, expected to close in the third quarter, would make CBS one of the 10 most popular Internet companies in the U.S., with 54 million unique visitors a month and approximately 200 million uses worldwide, the New York company said.
CBS said it will combine CNet's sites with its own online properties, including CBS.com, CBSSports.com and CBSNews.com.
A group of investors led by New York hedge fund Jana Partners LLC has been agitating for a shake-up at the company after its shares fell sharply in the past year. Jana Partners has led a proxy fight to get a slate of directors elected to the CNet board.
The investors have accused CNet's management of failing to take advantage of the company's online presence to grow revenue as quickly as the advertising market is increasing.
A Jana Partners spokesman said the company did not have a comment yet on the CBS bid.
CNet recently reported a narrower first-quarter loss and said revenue grew by 2.6 percent to $91.4 million.
"There are very few opportunities to acquire a profitable, growing, well-managed Internet company like CNET Networks," CBS Chief Executive Leslie Moonves said in a statement.
CNet shares jumped 43 percent to $11.32 in electronic premarket trading. CBS shares slid 72 cents, or 3 percent, to $24.10 in premarket trading.
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