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MAID Shareholders Approve Acquisition of Knight-Ridder Information
by
Posted On November 13, 1997
On November 10, MAID's board of directors announced that at the Extraordinary General Meeting held that day, resolutions required to approve the acquisition of Knight-Ridder Information, Inc. (KRI) were approved by MAID's shareholders, reportedly by a unanimous show of hands. The purchase price is $420 million, financed partially by the recent issuance of new shares. The new company is to be known as The Dialog Corporation.

Completion of the acquisition, subject to certain closing conditions, is expected to take place on November 14, immediately following listing of the combined Company's ordinary shares on the London Stock Exchange. At that time, the Company's Ordinary Shares and American Depositary Shares (ADS) are expected to commence trading on the London Stock Exchange and the NASDAQ National Market, respectively. Trading in the Company's Ordinary Shares and ADS has been suspended since October 2, pending completion of the acquisition.

Dan Wagner, chief executive of MAID, said, I am delighted that we have received such strong support from both new and existing investors for our proposed acquisition of Knight-Ridder Information, which we expect to complete at the end of the week.

The real work now begins in implementing our integration plans and delivering the benefits that the combination of MAID and Knight-Ridder Information offers both to our customers and our shareholders. The formation of The Dialog Corporation represents an exciting step forward for both companies, and I look forward to updating you on our progress over the coming months."

Wagner will be the chief executive officer of the new company, and the current president of KRI, Jeff Galt, has joined the board and been named executive vice president. (By the way, some of us who visited the MAID site and viewed the proposed board composition were dismayed to notice the lack of any female board members.) Galt will be based in the U.S. and his counterpart in London is Derek Smith.

Galt provided the following statement concerning the new company and its future:

The recent spate of mergers is indicative of the need for and value of scale in this increasingly resource-intensive industry. The need for resources devoted to technology and technical innovation, content acquisition and development, and customer service and support are expanding rapidly in this truly global industry in which the pace of change is accelerating rapidly. The combination of MAID and DIALOG creates a true industry leader in many dimensions--content, technology, and customer support. And it does so on a worldwide basis. We are enthused about what that leadership position will enable us to deliver to customers in terms of enhanced products and services with a firm commitment to quality and customer satisfaction. The next few years are going to be exciting for all of us."

Some Questions Answered

While many details of the integration and plans for the new company could not be released at this point, sources confirmed plans for three main operating divisions. The groupware and intranet solutions division is seen as having great potential, with plans to use information professionals in organizations to roll out information services within the organization. The interactive solutions division would consist of the DIALOG and DataStar services, plus the two end-user products, Profound and DIALOG Select. The third division is to be alliance revenues, which would encompass and expand upon current alliances with companies like AltaVista and Microsoft.

There was speculation that the Cary, North Carolina headquarters of MAID's U.S. operation would close and move to KRI's headquarters in Mountain View, CA--with the opposite rumored as well. However, in a phone interview on November 12, Wagner said that neither site would close, but both were likely to be downscaled from current employee levels. The Cary location is likely to be the headquarters for U.S. sales, while the California base would house some headquarters functions, key management, and the technical division.

In answer to the nagging question of whether the KRI professional services would be changed, merged, or absorbed in some way, Wagner emphatically stated that the DIALOG and DataStar services would remain. The company will not change the way they are used by professional searchers, he said, but they would take steps to bridge the gap between the two for data retrieval. One step will be a consolidation of the three separate data centers into a single center in Palo Alto, CA. He also announced plans to bridge the "cultural gap" between DIALOG and DataStar, labeling it an "awful situation." He stressed that they intend to have "one company, one focus, one online business."

On another important question, Wagner said that MAID's InfoSort technology would ultimately be applied to all company databases, but only in products for the end-user market.

Questions Remain—Stay Tuned

While the deal certainly moved quickly (especially when compared to the year-long dragged out negotiations, and ultimate failure, of the British Telecom proposed buyout of MCI), employees of Knight-Ridder Information have been waiting anxiously to hear plans for them and their products. Loss of jobs is a distinct possibility with the planned savings from the merger hoped to be at least $35 million, annualized. Wagner stressed that downsizing of employees due to overlapping functions would be done fairly, not with KRI employees singled out for cuts. He said that the numbers definitely had to come down, but that the best employees would be kept.

Information professionals have expressed concern all along about the planned acquisition and the effects on company services and pricing. Most now seem resigned to the deal and have taken a wait-and-see attitude, hoping that promises are kept concerning no cost increases and the availability of alternative pricing to an up-front annual subscription fee. While searchers remain wary, Information World Review, the industry newspaper in the U.K., reported that business and company information providers appear to be supporting the deal, while even scientific information providers seem confident that the new company will continue to support their content.

Buyout/Merger Mania

We have just seen the recent merger news of Desktop Data and Individual Inc., pioneers in personalized news delivery. In November we reported the Reed Elsevier/Wolters Kluwer mega-merger. These all reflect a consolidation trend that we are seeing in the information industry, as players jockey to grab market share and compete in a growing but increasingly competitive arena, with content providers, aggregators, and distributors all working deals and alliances. This mirrors the same amalgamation and deal-making we are seeing in other Internet-related sectors—the software business, among the Internet service providers, and in the telecom industry. Survival of the fittest is a tough game and allies are important.


Paula J. Hane is a freelance writer and editor covering the library and information industries. She was formerly Information Today, Inc.’s news bureau chief and editor of NewsBreaks.


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