AFCV Holdings is to buy Answers.com for $127 million.
The deal will see AFCV, a subsidiary of Summit Partners, hand over $10.50 in cash per share, a premium of around 33 percent on the closing price of stock for the last 90 days, with a total acquisition cost of approximately $127 million.
Common stock, Series A convertible preferred stock and Series B convertible preferred stock will all go to AFCV Holdings. Holders of the Series A and B shares will receive cash consideration for their stock at a rate equivalent to that of common stock.
Bob Rosenchein, CEO of Answers.com, said that he was pleased that the deal gives good value to investors, but it is not clear what financial situation Answers.com was in before the acquisition offer was accepted.
Its Q3 revenue for 2010 was slightly down at $4.452 million, compared to $4.987 million in the same quarter in 2009. It predicted a stronger fourth quarter and a strong 2011, but those figures have yet to be released and could be poorer than expected.
The interactive search approach is an interesting one, but with the popularity of Google and the recent growth for Bing, Answers.com is up against a lot of competition, not to mention rival ask and answer sites. This feature is what distinguishes them from the major companies, but it’s difficult to see it as a real money-maker compared to the established Yahoo answers and upstarts like Quora.