InfoSpace Buys Mercantila

InfoSpace Inc. (Nasdaq: INSP) has acquired the assets of San Francisco-based online retailer Mercantila Inc. The deal is valued at $8 million in cash, plus the assumption of up to $5.9 million in liabilities. Mercantila has raised around $27 million in VC funding, most of which came from Lightspeed Venture Partners.

PRESS RELEASE

, a InfoSpace, Inc. (NASDAQ:INSP), a developer of metasearch products, today announced that it has purchased assets from Mercantila, Inc., a privately-held specialty online retailer, in a move that will diversify its business model. The transaction closed on May 10, 2010, and includes a purchase price of $8 million in cash, plus the assumption of certain liabilities, not to exceed $5.9 million.

“Mercantila will provide InfoSpace with a foundational technology platform and represents the first step in our differentiated e-commerce strategy,” said William J. Lansing, chief executive officer of InfoSpace. “Through organic growth and development of Mercantila’s current platform, along with other acquisitions, we intend to become a strong e-commerce player. We believe that e-commerce represents an attractive segment in which InfoSpace can build a profitable business, accelerate the monetization of our NOLs, and create additional shareholder value.”

The acquisition is part of InfoSpace’s strategy to expand its online audience beyond search.

InfoSpace will build on Mercantila’s strong drop-ship supplier platform to support InfoSpace’s low asset intensive approach to e-commerce. Mercantila owns more than 200 specialty stores on the Web under a range of domain names and has partnered with more than 1,000 fulfillment partners to supply its products.

Mercantila will operate as a wholly owned subsidiary, under the leadership of Nikhil Behl, its former chief merchandising officer and newly appointed chief executive officer of the subsidiary.

“This is an excellent transaction that creates greater opportunity for both of our companies,” said Mr. Behl. “Our strength in drop-ship e-commerce coupled with InfoSpace’s capital and technical talent is a formula for rapid expansion and growth.”

Union Square Advisors LLC acted as the financial advisor to InfoSpace on the transaction.

Revised Second Quarter 2010 Guidance

InfoSpace is updating its guidance for the second quarter of 2010 to reflect the anticipated results following its acquisition of assets from Mercantila. The Company expects revenues to be between $57 million and $61 million, Adjusted EBITDA to be between $9 million and $10 million, and net income to be between $1 million and $2 million, or $0.03 and $0.05 per diluted share.

Webcast and Conference Call Information

InfoSpace will host a conference call at 7 a.m. Pacific / 10 a.m. Eastern this morning to discuss the acquisition. To access the conference call, please dial 866-730-5767 (U.S. and Canada), or 857-350-1591 (international), and use the code 80287998. A simultaneous live Webcast of the call will be available on the Company’s Web site at www.infospaceinc.com.

About Mercantila, Inc.

Mercantila is a collection of over 200 specialty retail stores that offer a selection of products in various categories, including home, garden, fitness, health, sports, and kids. The company was founded in 1997 and is headquartered in San Francisco, California. Additional information may be found on the company’s Web site at www.mercantila.com.

About InfoSpace, Inc.

Founded in 1996, InfoSpace (NASDAQ: INSP) brings the best of the Web to Internet users, helping consumers buy and discover what they are looking for online. InfoSpace’s proprietary metasearch technology combines the top results from several of the largest online search engines, providing fast and comprehensive search results. Also available on nearly 100 partner sites, InfoSpace powers a portfolio of branded Web sites including Dogpile® (www.dogpile.com), DoGreatGood™ (www.dogreatgood.com), InfoSpace.com® (www.infospace.com), MetaCrawler® (www.metacrawler.com), WebCrawler® (www.webcrawler.com), and WebFetch® (www.webfetch.com). In addition, the Company operates an e-commerce channel that includes a collection of more than 200 specialty retail stores under the Mercantila® (www.mercantila.com) brand, as well as a competitive shopping site, Haggle™ (www.haggle.com), and innovative online search engine optimization tools with WebPosition® (www.webposition.com). For more information about the Company and our portfolio of online brands, visit www.infospaceinc.com.