Via PaidContent comes news that Answers.com has reached preliminary agreement to acquire Lexico Publishing, parent of Dictionary.com, Thesaurus.com and Reference.com for $100 million.
From a content standpoint, the deal makes a lot of sense. Answers.com is effective at converting traffic to ad revenue and the acquisition would double its monthly page views. According to its press release, the combined entity would rank 28th in comScore's rankings of U.S. sites. Similarly, the combined company would rank second only to Wikipedia in terms of reference information sites, according to Hitwise statistics.
The price of $100 million would be roughly 14x 2007 revenues of $7 million and 35x earnings of $2.8 million.
As Staci points out, the deal would require Answers.com to raise substantial funds, likely through an additional stock offering, diluting the value of current shares.
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