Online computer news network CNET Networks will buy Ziff-Davis and its online business ZDNet for US$1.6 billion in a stock deal designed to produce a leading tech news and services business. Together the two companies have an online audience of 16.6 million unique monthly users, without overlap.
As part of the merger, each share of Ziff-Davis stock will be converted into a 0.3397 share of CNET stock and each share of ZDNet stock will be converted into a 0.593 share of CNET stock. The deal represents nearly a 50 percent premium for ZDNet but a discount of about four percent on former trade publisher Ziff-Davis, which sold off print publications in 1999 to a private investment firm, keeping only its online unit.
According to a statement, CNET expects to issue about 50 million shares of common stock in the deal, valuing the merger at US$1.6 billion. CNET had about 85.8 million shares outstanding.
CNET said the deal will give it one of the top Internet positions in Europe and Asia. The combined entity will deliver content and services under both the CNET and ZDNet brands in 23 countries.
As a result, holders of Ziff-Davis stock, which is the majority owner of ZDNet, will hold about 35 percent of the combined equity. Softbank, which owns a majority of the voting stock of Ziff-Davis, has agreed to vote its shares in favour of the deal.
Prior to the completion of the merger and as a condition to the deal, Ziff-Davis, as previously announced, will spin off its trade show and conference business and the publisher expects to pay a cash dividend of about US$2.50 per Ziff-Davis share to its stockholders. The spinoff and cash dividend are expected to be completed in mid-August.
Shares of Ziff-Davis closed at 11-3/8 and shares of ZDNet closed at 12-7/8 on Wednesday. Shares of CNET closed at 32-3/16.
