Answers Corp. Buys Dictionary.com For $100m Cash, Then Issues Revenue Warning

Answers Corp. (ANSW), which runs the Answers.com Web site, Wednesday afternoon announced it is acquiring Lexico Publishing Group, a private held company which operates the Web sites Dictionary.com, Thesaurus.com and Reference.com, for $100 million in cash.

The deal is subject to Answers raising financing.

Answers said Lexico in 2006 had revenue of $7 million, EBITDA of $2.9 million and net income of $2.8 million. The company says the acquired sites have 3x the traffic as Answers.com, but one-third the monetization rate, making the upside “compelling.”

Answers says combined the properties reach over 22.5 million unique users, which it says would rank #28 in the U.S. The combination would also rank as the #2 reference site on the Web after Wikipedia, the company said.

Meanwhile, Answers also said revenue in the June quarter will be $2.75 million to $2.8 million, rather than the original guidance of $2.8 million to $3.2 million. The company blamed “more pronounced seasonality in traffic in 2007 that what was experienced in 2006, along with a continued slower than anticipated ramp of its direct ad sales effort.”

In today’s regular session, Answers fell 11 cents at $12.90. [Editor's note: ANSW dropped 14% after hours following the news release.]