Yahoo! in $1.6bn web deal

The internet firm Yahoo! yesterday unveiled a $1.6bn cash and shares offer for Overture Services - the online search business which recently snapped up the search engine Alta Vista.

The deal is designed to give it a greater footprint in web searching - an area where rival internet operation Google, with its popular, clutter-free site, has been stealing a march.

Terry Semel, Yahoo's chief executive, said the purchase would make Yahoo "the largest global player in the rapidly growing Internet advertising sector".

Overture's so-called pay-for-performance search service enables companies to pay to be displayed higher up on the pages of internet search lists.

Yahoo! said yesterday this was the fastest growing area in internet advertising. The worldwide commercial search market is expected to grow at 35 per cent a year to $5bn by 2006 from around $2bn by the end of this year, it estimated.

"Together, the two companies will be able to provide the most compelling and diversified suite of integrated marketing solutions around the globe, including branding, paid placement, graphical ads, text links, multimedia, and contextual advertising," Mr Semel said.

The deal comes less than six months after Overture Services announced it was buying Alta Vista from the US technology fund CMGI in a deal worth $140m. The company has also recently bought the web search business of Fast Search & Transfer.

Ted Meisel, Overture's chief executive, said: "Overture pioneered commercial search, and we absolutely believe there remains huge upside potential in this market."