The deal will put Mr. Dilleris company into a more competitive position against Google Inc., Yahoo Inc. and Microsoft Corp.is MSN service as Mr. Diller increases his financial stake in electronic shopping and travel business Web sites. On Monday, IAC also launched Gifts.com, an online gift shopping resource that allows consumers to purchase gifts tailored to their interests.
"We believe that in the future (Ask Jeeves) has the potential to become one of the great brands on the Internet and beyond, and by beyond we mean in wireless, in the search for anything on any device," Mr. Diller said.
InterActiveCorp said it will issue 1.2668 shares of its stock for each Ask Jeeves share and then buy back at least 60 percent of the shares it issues to offset their dilution.
Ask Jeeves would continue to operate as a stand-alone business after the acquisition, and Steve Berkowitz will continue as its Chief Executive Officer.