Answers.com Extends Deadline For Lexico Acquisition by 48 Days; Ups Reimbursement if Deal Fails
Another sign that Answers.com (NSDQ: ANSW) may not be able to complete its $100 million acquisition of Lexico (parent of Dictionary.com) ... in a filing with the SEC this morning, the company said that it has extended the original 180-day deadline (from July 13, 2007) by 48 days, to 228. In return for the longer wait, Lexico will get a $500,000 reimbursement if the deal falls through, up from the previously agreed $400,000.
Answers can’t complete the deal unless it can raise the funds, up to a planned $140 million, which it said it would do through common stock, preferred stock, debt and warrants. So far, though, the company hasn’t made much progress towards this goal. The company’s share count is exactly where it was when the plan was first announced, suggesting no share sales, and its recent cash flow statement confirms that it’s done little or no other financing activity since then. A couple weeks after the original announcement, Answers announced that it had taken a major hit due to an algorithm change at Google. Between that and the tightened credit markets, it’s easy to understand the hold up.
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Comments (9)
Nov 16, 2007 12:18 PM
This deal is dead in the water.
No one is going to fund a company as badly managed as Answers to overpay on a deal (even a deal that valuation aside would make great sense for them).
Only a matter of time before someone else snaps Lexico up, eating the inconsequential break-up fee if necessary, and prob for a lower price.
Nov 16, 2007 12:22 PM
Totally agree. Anyone that knows answers.com knows they are a shaky company.
Nov 16, 2007 1:45 PM
According to Quantcast, Answers.com is doing quite well. And according to Comscore, for the first nine months of this year, Answers.com’s WikiAnswers unique monthly visitor count in the U.S. has grown 317%, to over four million. This ranks WikiAnswers as the second-fastest growing domain of the top 1,500.
Nov 16, 2007 2:03 PM
And your role with Answers is what?
I’m sorry but the business is not doing well by any measure. 3Q earnings anemic. Etc.
If a company with “24M monthly uniques” (US) and “133M monthly pages” can’t make hay in this market, then something is very wrong.
Nov 16, 2007 6:04 PM
I agree with John. It will most likely go to someone else who actually has money (for a much lower price)
Nov 17, 2007 2:23 PM
The truth is that John C. Smith (and likely Stone and cometogether) are with FunAdvice, a competitor of Answers.com’s WikiAnswers Q&A;site. They no doubt carry a heavy bias. Don’t believe everything you read on the internet folks.
Nov 20, 2007 6:30 PM
Ouch!
For the record, I definitely don’t work at FunAdvice.
I’ve in fact never heard of FunAdvice.
I think the bottom line here is very clear from Answers’ 3Q earnings (and balance sheet!).
Nov 24, 2007 2:14 AM
Answers announced departure of its “Chief Revenue Officer” shortly after they announced the Lexico buy, saying it was seeking a COO - so who was running the store before? Mouthpiece now is the “Chief Strategy Officer”, its ex-IR guy. CROs and CSOs? Give me a break. It will NOT get a $140M floatation to buy a bigger, better company when itself is now valued at just $50M; and as John Smith reports, no one on Madison Avenue wants to give AD $ to a less than vibrant site/portal, even with “24M uniques, etc”. Nor the Publishing World thru partnerships. Current Cash is $7M, but net of the $.5M Lexico break-up fee and leaving $2M for severance and wind-up cash, they really only have $4M of operating cash. Answers will go bust by YE 08: someone will buy patents for $20 or $30M. Chalk-it-up to bad branding and failed management/leadership.
Feb 27, 2008 5:23 PM
It was 100 mln for a DOMAIN name, and also management not being able to get break-even and being allways wrong on guidence