Update: Answers.com Bid For Lexico Nixed; Stock Sale Is Pulled
By Joseph Weisenthal - Wed 13 Feb 2008 05:04 AM PST
As we had suspected all along, this one did not go through: Answers Corp.’s (NSDQ: ANSW) uphill battle to acquire Dictionary.com parent Lexico has failed, as the company’s last-ditch $100 million stock sale has been pulled. The original $100 million offer for Lexico was announced last July, and it was always contingent on the company being able to raise a substantial amount of money. It first planned to raise up to $140 million through the sale of various securities. A major indication that the deal was on the ropes came in November, when Answers announced an extended deadline on the deal and a bigger reimbursement to Lexico if the deal were to fail. After the initial funding attempt didn’t come through, Answers said in January that it would sell $100 million of stock in an offering to institutional investors. But, citing the old standby “unfavorable market conditions,” the company has canceled the offering and declared that the Lexico purchase will expire on March 1. Naturally, Answers now says it will focus on growing its core business. Release.
Note, Reuters interprets today’s announcement as “casting doubt” on the Lexico buy. But it doesn’t offer any other suggestion that Answers is making an effort to get the deal done by the end of the month.
Rafat adds: This does mean that other bidders in the deal initially may come back, at a much lower valuation.
Update: Just in case there were any ambiguity on this, Answers has given up on buying Lexico. CEO Bob Rosenchein told AP that it’s no longer pursuing the deal: “We’re not counting on being able to buy them… I think we’re disappointed that we weren’t able to complete the transaction we anticipated.” Also, on the news, Answers has shot up 11 percent, and is now well above the lows it hit when it first announced the $100 million share offering.
Posted in: Money, VC+M&A, Mergers & Acquisitions
