Diller’s IAC May Buy Ask Jeeves

IAC/InterActiveCorp, an Internet conglomerate run by media mogul Barry Diller, is near a deal to buy Web-search service Ask Jeeves Inc., sources familiar with the matter said Sunday.

The Wall Street Journal, which first reported the deal, said IAC would pay $2 billion in stock, a 40% premium to Ask Jeeves’ market capitalization on Friday.

Neither Ask Jeeves nor IAC were immediately available for comment.

IAC has a variety of Internet businesses, including Home Shopping Network, Web directory Citysearch and online mortgage provider LendingTree. It also owns travel site Expedia.

Ask Jeeves’ website Ask.com, with its cartoon butler mascot Jeeves, became known during the Internet boom of the late 1990s for providing the answer to queries made in the form of a question.

The reported price would value Ask Jeeves stock at about $33.90 a share, compared with a close of $24.24 on Friday on Nasdaq. That would be below the 52-week high of $44.66 that the stock hit in April and the $34.99 it closed at Oct. 27, when the company reported earnings that sparked worries about growth and pushed the stock down 24% in one day.

Other media companies have also received rich valuations recently as they have become hot properties once again. New York Times Co., for instance, agreed to buy information portal About.com for $410 million, and Dow Jones & Co. paid $528 million for financial news website MarketWatch Inc.

Ask Jeeves would be one in a stream of acquisitions for IAC, which this month said it would buy catalog and online retailer Cornerstone Brands Inc. for $720 million to expand across multiple retail outlets.

It would put IAC more directly in competition with larger search sites run by Google Inc., Yahoo Inc. and Microsoft Corp.