Answers Corp. calls off $100-million Lexico deal

Public offering to raise the necessary funds falls short.

February 14, 2008 09:38
1 minute read.
Answers Corp. calls off $100-million Lexico deal 88 224. (photo credit: Courtesy)


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Answers Corporation's bid to acquire Dictionary parent company Lexico for $100 million has been pulled off after the Jerusalem-based company canceled its proposed public offering because of unfavorable market conditions. "The acquisition we announced last July was contingent on the public offering to raise the necessary funds," Answers Corp. founder and CEO Robert Rosenschein told The Jerusalem Post Wednesday. "Due to the state of public markets, we were unable to complete our proposed public offering. However, I am very encouraged by the continued growth of our business fundamentals." Answers Corp. runs the Internet content sites and Last July it announced an agreement to purchase Lexico Publishing Group, LLC, the owner of, and, for $100 million in cash, subject to financing conditions. The agreement to acquire Lexico expires on March 1. "There is no break-up fee, but we agreed to pay up to $500,000 in accounting fees in case the financing could not be raised," Rosenschein said. The addition of Lexico's Web properties would have increased Answers Corp.'s reach to more than 22.5 million monthly unique users. "At the time, it was exciting for us to have a lot more traffic and increasing our reach to many more users," Rosenschein said. "But working with underwriters on a road show for the public offering over the past months, we saw market conditions worsening and fund investors adopting a wait-and-see attitude, taking no new positions on smaller companies. "Over the same period we saw our business and products develop and grow much better than expected, in particular" Answers Corp. expects revenues in 2007 to come in 55 percent higher than in 2006 and to generate a profit in the fourth quarter, based on adjusted earnings before interest, tax, depreciation and amortization (ebitda). "In 2008, we expect adjusted ebitda to be positive," Rosenschein said. "With 573% growth, WikiAnswers was ranked the fastest-growing domain of the top 1,500 in the US for all of 2007, as measured by unique monthly visitors, according to comScore. WikiAnswers is now the second-place site in the Q&A category, three times the size of our next five competitors combined, according to a Hitwise custom-category ranking of Q&A Web sites." Looking ahead, Rosenschein said, the company would like to focus on growing its core business, while also considering acquisitions, but on a smaller scale.

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