InfoSpace Divests Mobile to Motricity to Focus on Search

Motricity said yesterday it would acquire the mobile services business unit of InfoSpace in an all-cash transaction for $135 million. The deal expands Motricity’s footprint to the majority of the top 13 carriers in North America, and more in Europe. It leaves InfoSpace to focus on its search business.

After the deal closes, Motricity will provide services to 11 U.S.-based carriers including AT&T, Verizon Wireless, Sprint, T-mobile, Bell Mobility, Tracfone, and Alltel. Relationships in Europe include Virgin U.K., KPN, and Vodafone. Prior to the acquisition Motricity worked with seven U.S.-based carriers and had a small presence in Europe.

Motricity, through its Fuel platform, builds and runs mobile storefronts for carriers. The company also builds portals, communities, and gateway services on the mobile platform, and has a campaign manager to distribute content and applications for clients. Motricity get fees from transactions such as downloadable ringtones sales.

InfoSpace’s mobile operations has similar offerings through its mCore platform. The services range from portal and storefront building, search, messaging, and managed Web services. While the product offerings of the two companies overlap somewhat, InfoSpace’s strength lies in the portal and search areas. InfoSpace’s mobile operations powers the white label portal and search functions for AT&T and Verizon in the U.S., according to Motricity.

“We shared a similar vision, had a similar suite of products,” said Motricity VP of Strategy Development Chris Chuang. “We were stronger in a few areas, they were stronger in others. By combining we create the strongest player in each of the categories, while creating all that breadth.”

With a footprint extending to the majority of U.S. carriers and additional offerings, Motricity expects to gain reach in the mobile marketplace. “Together, we will be powering over a billion dollars in content sales generated from tens of billions of page views and user impressions and hundreds of millions of search queries in North America,” said Motricity’s chairman and CEO Ryan Wuerch.

Wuerch will continue to lead Motricity from its Durham, NC, headquarters, while InfoSpace’s mobile unit EVP Steve Elfman will become president and COO after the deal is complete. Chuang expects employees of Motricity and InfoSpace’s mobile operations to keep their jobs, and mostly remain in their existing offices in the Seattle area and Los Angeles. Motricity, in the deal, will gain offices in the U.K., Paris, and the Netherlands.

InfoSpace’s divestiture of its mobile unit follows the September sale of its online directory business for $225 million in cash to Idearc, publisher of Superpages.com and Verizon Yellow Pages.

What will InfoSpace be left with? “We are going to be a company focused solely on search,” said InfoSpace spokesperson Stacy Ybarra, adding the search represented 60 percent of the company’s overall revenue prior to the divestitures.

The mobile services acquisition is subject to regulatory approvals and is expected to close within 90 days. Motricity acquired M7 Networks in 2005, and GoldPocket Wireless in 2006. While Motricity has continued to make acquisitions as part of its strategy, InfoSpace’s mobile operations rounds out its offerings for now.

“Acquisitions have been a core part of our strategy growth,” said Chuang. “Going forward, we are very pleased with our market position and complete solution and see no burning need to continue with acquisitions.” Though he emphasized Motricity also won’t rule out the possibility of additional buys given the current momentum of mobile industry consolidation.

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