PRIMEDIA ACQUIRES ABOUT.COM FOR 45 MILLON SHARES OF STOCK.

In related news, Primedia (New York) has signed an agreement to acquire About.com (New York), an Internet company that offers topic--specific information supplied by "affiliates," for 45.2 million shares of Primedia, or 2.3409 Primedia shares for each share of About.com. The deal was valued at $690 on the day it was completed (Oct. 27; $15.25 per share), but fell to $511 million in value by Oct. 31, when Preimedia's stock declined to $11.31 per share.

Established in 1996, About.com completed its IPO in March 1999. About operates more than 700 Web sites devoted to a variety of consumer and trade niche markets, including cats, beekeeping, quilting, sports, satellite communications, fiber optics, broadband, IPSs, personal finance, and travel. The sites are authored by associates who receive a flat fee for every click through. Primedia Chairman Tom Rogers said the deal transforms Primedia into an Internet player. "In one fell swoop, we are marrying Primedia's ... content in more than 700 media niches with About's more than 700 topic-specific Guide Sites and some 10,000 associated experts.

Noting that Primedia has a 1600 person sales force and 60,000 advertisers, most of which are not Internet companies, Rogers said that "applying this force to About's niche-based sites," while driving magazine subscribers to the sites, combining other revenues with cost synergies and cutting Primedia's own spending on Internet businesses "yield a high growth formula." About.com currently has 4000 advertisers, 60% of which are dot-coms.

The deal is expected to close in the first quarter of 2001, although regulatory approval is not a given. Assuming approval is granted, shareholders of About.com will end up owning about 22% of Primedia. Primedia is majority owned by Kohlberg, Kravis Roberts.