Excite to Buy Classified Ad Company

Excite Inc., one of the most popular navigation sites on the Internet, has agreed to acquire Classifieds2000 Inc., a leading online classified advertising company, for $48 million in stock.

The acquisition, to be announced today, would put Redwood City, Calif.-based Excite in position to capture a large chunk of the Net’s burgeoning classified market, which brought in $123 million in revenue last year, according to Jupiter Communications.

But the deal is also part of an ongoing battle for market share among Excite, Yahoo Inc. and other companies that are vying to make their sites consumers’ primary portal to the Net.

“Our business, first and foremost, is aggregating as many consumers as possible at our site,” said Joe Kraus, senior vice president and co-founder of Excite. “We think one of the big draws online is classifieds.”

Excite and other so-called content-aggregation sites depend almost entirely on advertising revenue and can command higher rates if they attract more users.

According to the terms of the deal, Excite will exchange 890,000 shares of its common stock for all outstanding shares of Classifieds2000, a privately held company based in Sunnyvale, Calif.

Excite executives declined to discuss the revenue of Classifieds2000, which allows consumers to place ads for free and makes money by selling display ads on the site.

Analysts said the deal could create problems because Classifieds2000 gets much of its traffic by advertising on sites that compete with its new owner.

“The competition is so steep in this space,” said Patrick Keane, an analyst at Jupiter Communications, “that I don’t think Lycos or Infoseek will want a competitor in their space.”

But Kraus said that isn’t expected to be a problem because companies that compete in some areas online are often partners in others.

He added that Excite will look for ways to weave Classifieds2000 throughout Excite’s content channels and search functions. Consumers checking sports scores, for instance, might be offered a link to classified ads for sporting goods.

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Greg Miller can be reached via e-mail at greg.miller@latimes.com