America Online Inc. and Excite Inc. will create a new search engine that is expected to be rolled out within the next 60 days for the online service's 7 million users, officials of the two companies said during a teleconference this afternoon.
The new engine, "AOL Search Powered by Excite," will be the only one directly available to AOL subscribers, under the terms of an agreement announced this morning.
"We believe that consolidation will continue to occur in the search engine and directory services markets, and this deal gives Excite a lock on what we think is the most important distribution structure" for its services--AOL's user base, Excite President and CEO George Bell said during the conference.
The deal also calls for Excite to acquire AOL's WebCrawler search technology in exchange for 2 million shares of its common stock, or approximately $18 million at today's price. All 15 employees on AOL's WebCrawler team will be relocated from their current San Francisco office to Excite's Mountain View, Calif., headquarters, company officials said.
The news was a boon for both companies' stocks, with Excite shares shooting up $3.75 to $9.87 and AOL shares up $1.50 to $32.63 in late-afternoon trading today.
AOL is based in Dulles, Va.