Steve Ballmer has officially walked away from what would have been the biggest tech deal ever, citing that Yahoo!’s price was too high. Coverage from the Merc.

Norwegian-owned Interinfo was purchased by BaltCap, the leading private equity investor in the Baltic states. Interinfo represented the last directory holding of Texas Pacific Group, previous owners of Norway’s Findexa, now owned by Eniro. Terms of the deal were not disclosed. 

Interinfo’s Yellow Pages operating properties are located in Lithuania, Estonia and Latvia with an estimated annual turnover of 15.5 million euros in 2007.

According to Simonas Gustainis, partner of BaltCap: “The Interinfo group of companies has a strong position on the Baltic advertising markets, especially for local services. We look forward to working together with the strong management team to continuously improve the products and services of the Group. Interinfo with its highly trained sales team, comprehensive databases and strong brands will be in an excellent position to continue as the leading information provider in the Baltics.”

Peeter Saks, managing partner of BaltCap, went on to say, “We believe the advertising and information directories sector has a great growth potential in the Baltics and look forward to being a part of this via our investment in Interinfo.” 

It is not clear if CEO Magnus Sonnorp will continue in his role with the company. Sonnorp became part of the management team when Findexa was acquired by Texas Pacific Group and later became group CEO of Interinfo.   

Spot Runner has gone into the local reseller channel in a major way by acquiring Weblistic, a company headed by Ketan Shah (and whose president is Yellow Pages Commando Dick Larkin). The company has 50 employees and is headquartered in Fremont, near San Jose, with additional offices in Carlsbad, CA, near San Diego and Chicago. It also has sales staff in the New York metro area and Denver. Its employees will be combined with Spot Runner’s 300 employees.

No price was disclosed but it’s an all-stock transaction. Going forward, Weblistic will be marketed under the “Spot Runner” brand.

Most of Spot Runner’s prior emphasis has been on providing largely prepackaged video production and media planning to national organizations as a way to offer localized video to franchisees and other national advertisers, including Realogy, Century 21, Steak & Ale, Diamond Jewelers and Warner Independent Pictures.

More recently, however, the company has been steadily building up its local capabilities, first by acquiring a videographer network a couple of months back — a step that put it in competition against companies such as TurnHere and Denver Multimedia, both of which are being resold by city guides, Yellow Pages and other local resellers.

Spot Runner also has opened 30 local sales offices in different parts of the country, all of which will now use the Weblistic software platform. The platform had its origins in the old Yellowpages.com platform, pre-AT&T (Shah had been Yellowpages.com’s CTO).

Spot Runner cofounder David Waxman says the company is now going to focus on providing a true multimedia capability. “TV is the best option for some. For others, some search is a better option.” Advertisers are “increasingly asking for other media” including radio, outdoor, print, he adds. “They are clamoring for a full-service offering.”

It doesn’t appear likely that Spot Runner will underestimate the considerable challenges of local advertising. One of its top sales executive is local sales vet Tim Lambert, who previously worked with Yahoo!, HotJobs, Knight Ridder Digital and Pac Bell Yellow Pages (although he is currently more focused on national sales efforts). But it will still need to get good interactive sales pros. They’re in very short supply.

Another challenge will be to differentiate itself among the glut of resellers, which include ReachLocal (valuation = $300 million), WebVisible, Yodle and Orange Soda. Each claims various advantages in software, algorithms and systems, but to a layman, the differences are slight.

The final challenge will be to truly leverage its existing relationships. Spot Runner investors include CBS and ad agency giant WPP. Moreover, former AOL President Bob Pittman sits on its board.

Yellow Pages Group in Canada made another small step toward complete coverage of the Canadian directory market by acquiring the directory business from TBayTel, a leading telecommunications company in Thunder Bay and Northern Ontario. This means YPG will now be the incumbent publisher in Thunder Bay. TBayTel published one directory title with distribution of more than 120,000 copies. YPG has long served as the sales agent for the TBayTel directory operation.

While this isn’t a large deal, it helps consolidate YPG’s hold on Ontario, Canada’s most populous province.

That TBayTel sold the directory operation is in keeping with the wider trend of telecoms divesting directories, taking a onetime infusion of cash now to spend on investments deemed more strategic. It also fits YPG’s preference to own what it produces, rather than act as an agent for another operator. Last year YPG similarly acquired Aliant ActiMedia, a publisher in which it had owned a small stake and served as sales agent.

Amid all the noise about Microsoft and Yahoo!, one of the unanswered questions has to do with MS’ intent toward the recruitment business – a business that actually has some relationship with Microsoft’s core enterprise solutions (as opposed to its less established interests in social networking and arguably, search).

As Ken Doctor points out, HotJobs comes as part of the package when you buy Yahoo!. As recently as June 2007, however, Microsoft acquired a 4 percent share in rival CareerBuilder – probably to cement its technology and advertising ties with the site, and with its owners: Gannett, Tribune and McClatchy.

Is a rollup of CareerBuilder and HotJobs possible? Alternatively, would Microsoft opt out of its interest in CareerBuilder, and instead form a duo with Monster, an independent, publicly owned entity with its own newspaper ties? Indeed, just thinking of Microsoft in the recruitment space makes me wonder: Should local media concerns be owning these incredibly complex, technology-driven verticals?

Local Insight Regatta Holdings and AT&T announced the acquisition of L.M. Berry’s Independent Line of Business unit. Terms of the agreement were not disclosed. According to the press release:

The transaction will combine two industry-leading organizations responsible for selling, producing and distributing nearly 700 print and online directories in North America. In connection with the transaction, Local Insight Regatta Holdings will also become an authorized reseller of advertising for AT&T’s YELLOWPAGES.COM Network, a leading Internet Yellow Pages and local search site.

While this sale is not totally unexpected, it does raise some questions about the future of the nearly 100-year-old Dayton-based L.M. Berry and Co. According to Scott Pomeroy, director of Local Insight Regatta: “I am pleased to say that key senior leaders from Berry have agreed to be part of the new company’s senior leadership. Dan Graham, current president and CEO of The Berry Co., has agreed to serve as executive vice president and chief administrative officer of the combined company — and in that capacity, will have responsibility for all integration initiatives, information technology and cultural stewardship. Kathy Geiger-Schwab, currently executive vice president for The Berry Co., will serve as chief strategy officer of the combined company, overseeing all strategic elements of the business including strategic and digital initiatives.”

As part of the agreement, AT&T will retain L.M. Berry’s South Central Area line of business, which it manages in AT&T’s five-state region (Alabama, Kentucky, Louisiana, Mississippi and Tennessee), and Berry Network Inc., its certified marketing representative unit, which places print and Internet directory advertising for national businesses.

L.M. Berry’s founder, Loren Berry, was the primary founder of the modern Yellow Pages, and his company was instrumental in building many of the current international directory companies through its joint ownership of ITT World Directories (now Truvo). When L.M. Berry was purchased by BellSouth, many of its entrepreneurial desires were placed on hold and this was again the case when it became part of AT&T’s BellSouth acquisition. The freedom from its corporate restrictions and new ties to an aggressive and growing investment group will provide the joint company with many more opportunities for growth in local media.

We will provide additional coverage of this transaction as we complete additional discussions with all the parties involved.

Today’s big news is Microsoft’s unsolicited takeover bid for Yahoo!. The $44.6 billion bid represents a 62 percent premium on Yahoo!’s closing stock price yesterday, which was affected by Yahoo!’s depressing earnings announcement, in which Yahoo! said it would lay off 1,000 workers to “re-accelerate” growth.

For 2007, Yahoo! reported a net profit of $660 million, down 12.1 percent as Yahoo! boosted marketing and development spending by 25 percent in an effort to catch up with Google. Yahoo! has a market capitalization of about $25 billion, compared with more than $300 billion for Microsoft.

Already, Yahoo!’s stock price is up 45 percent, which should be some solace for the execs — many departed — holding options, who have been watching their value fall precipitously.

Microsoft’s bid, of course, did not come from out of the blue. Earlier last year, Yahoo! broke off merger talks, so one assumes this new offer won’t be automatically accepted. Our guess is that other bidders will not enter the picture, unless Yahoo! solicits a “white knight.”

One thing we believe is that the “cultural” issues between Yahoo! and Microsoft are not as pronounced as they have been in the past. Yahoo!’s culture has changed enormously in recent years as it has struggled against Google, and it no longer seems to have such strong identity issues.

Going forward, the real question is who’s best positioned to compete with Google. According to comScore, Google’s share of the global Web search business stands at 77 percent, followed by Yahoo! at 16 percent and Microsoft at less than 4 percent.

Another question is who can get by the tough regulators at the EU (we don’t anticipate significant U.S. problems). Our view is that a Microsoft/Yahoo! merger would strengthen the competitive picture against Google, so regulators would ideally welcome it. Indeed, just a few weeks ago we stopped using the politically correct language “and Yahoo!” when talking about local search. Google is that far ahead.

Microsoft’s Aggressive Steps

What’s clear is that Microsoft plans to take the steps necessary to match up with Google. It has been extremely aggressive as of late with both the aQuantive purchase and the $300 million investment in Facebook. From a Microsoft point of view, Yahoo! is clearly its single best growth injection.

The focus here, of course, is on search. But search is just a piece of the puzzle. Yahoo! also brings to the table its instant messaging service, news access with audio and visual feeds, and personalized Web pages. For business, it offers several services aimed at helping companies boost their presence on the Internet. It has stakes in or owns several other companies, including online shopping with alibaba.com, Flickr for photo blogs and Kelkoo, which compares prices.

Generally, it is conceded in the industry that Yahoo! — including Yahoo! Local — has a first rate social platform. Yahoo! also has developed a relationship with hundreds of newspapers for its HotJobs recruitment service that has extended into display advertising and search. The newspaper consortium appears to be doing fairly well with Yahoo!, although it recently opted to go with Zillow for real estate.

A Closer Look at Integration Issues

An integration of Yahoo! and Microsoft assets is so complex and daunting that we believe little would quickly change. Globally, integration will be hampered by the companies’ respective partnerships, which are intertwined and deep.

The complexity of retaining Yahoo! consumer usage is another major concern. We view the integration of the ad platforms to be similarly complex, but perhaps not as daunting. We would note, however, that the merger would benefit from MSN Search’s longtime relationship with Overture, now known as Yahoo! Search Marketing. AQuantive is still separate, so bringing back-office operations together will be less sticky and tricky.

The integration of Hotmail with Yahoo! Mail is a bigger problem. We wouldn’t anticipate any near-term effort to integrate those two properties. Another area of overlap is in mapping. Yahoo! Maps has significantly greatly market share, but Microsoft has been pumping even more money into its Virtual Earth service and would likely become the merged company’s new standard. Another area of overlap is in mobile, where Yahoo! Mobile services have done well, but would run into Microsoft’s forced synergies on the WINce operating system.

(This post was coauthored by Matt Booth and Peter Krasilovsky.)

GetVendors.com, a California-oriented start-up profiled here last August, has been acquired by Matchpoint, a 30-person service, backed by Oak Investments and IdeaLab and incubated by a team of largely LookSmart veterans. Matchpoint got started a year ago and launched in late summer 2007.

President Peter Adams says too many companies have focused on the search marketplace vertically. But Matchpoint takes a broader, horizontal view, listing up to 2,000 categories. “We can generate leads for any kind of business,” he says. “The next step up from pay-per-click is per-per-lead.”

“Consumers go to search or Yellow Pages,” adds Adams. “But they are getting millions of results. And they don’t (learn) anything about the businesses” from these sources. With Matchpoint, advertisers can provide fairly complete information. They are also provided with HTML links, which can include photos. No plans for video, however, are in the works.

The way the company works is it gets consumer profiles, determines their needs and sorts its database of businesses to come up with ideal matches. “We look to see what the consumers type in the forums,” says Adams. “For eye care, they’ll ask how you correct your vision. Or maybe they’ll note if they had prior corrective surgery.”

After developing a list of leads, Matchpoint then calls the businesses, in case they aren’t glued to their PCs. The company is also studying the introduction of other confirmation platforms, such as instant messaging.

Consumers, for their part, get to see the entire list of businesses generated – typically, five. They have the option of calling businesses directly. But for reasons of privacy, businesses do not get to see the consumers’ information.

The cost of leads is based on an auction model. Some low-cost categories, such as wedding cakes, can go for $2. Others, like online trading, can go for $30.

Currently, advertisers are blended in with other listing companies, which are provided with up to 10 free leads. But if the level of advertising kicks up, advertisers might take up every slot.

Adams also notes that the company has aspirations for building a network far beyond the destination site (i.e., Just Eyes, which is touting Lasik Surgery using Matchpoint). “The forums are syndicatable widgets that other publishers can embed on their site,” he says, noting that Matchpoint already has a deal in place with MediaSpan to pitch its 1,500-plus publishers.

FAST Search and Transfer, whose “enterprise search” makes every element of an organization searchable, is being sold to Microsoft for $1.2 billion after the Oslo-based company severely missed sales goals and was forced last year to lay off a large number of employees. The company has recently sought to extend its role beyond enterprise search by developing AdMomentum, an AdWords-like ad solution.

FAST’s solutions are very focused on B2B, but they have been deployed by a number of local-oriented players, including MediaNews Group, The Washington Post, InfoSpace, Scandinavian publishing giant Schipsted, and the online directory efforts from Deutsche Telekom and Portugal Telecom. These companies used FAST to integrate their structured (news, directory, map, B2B, classified, encyclopedia) and unstructured data (Web, images, news).

Speaking at the Fast Forward conference last year, Reed Business Search President Stephen Baker said companies such as FAST are especially important in the era of user-generated content. The risk of giving control of content to users is that you mitigate the benefits of the Web 2.0 platform (SEO, preferential content delivery, etc.), he said. “The enterprise search solution gives back the control aspect.”

At the same conference, MediaNews Group VP Teresa Lawler said MNG married FAST’s search data with Omniture’s usage data and Tacoda’s behavioral data. “We’re sucking up all that data.”

One of the quietest but apparently most successful producers in the local search space has been GeoSign, owned by webpreneur Tim Nye. The Canadian company has incubated TrueLocal, which aggregates local online databases, and is also invested in mobile directory player Go2, among other geospatially savvy companies.

But most of its fortune, apparently, has been made from arbitrage: basically, collecting micro segment URLs for spammy blogs, or splogs (i.e., “swimmingpools101.com”), buying cheap placement on Google, and filling the ads with more expensive Yahoo! ads.

Last year, the publicity-shy company broke its silence when it announced $160 million in venture funding from Bethesda-based American Capital. Since then, however, Google put a hole in the business model by cracking down on such practices. And now GeoSign is evidently being split up, per TheStreet.com and Ann Brocklehurst’s blog (which we saw via PaidContent).

The Street.com article says GeoSign has laid off “a big chunk” of its 230-person workforce and split the company into two parts: eMedia Interactive, which will own the domain names; and Moxy Media, which is being positioned as a lead generator and will be given to American Capital. American Capital is also getting a “substantial” chunk of its cash back in the settlement.

The downsizing of GeoSign’s ambitions — not confirmed by us — might seem like it would also affect other geodomain-heavy companies, such as Marchex. But Marchex is an entirely different kind of company, says Matthew Berk, Marchex’s lead search architect.

“On the traffic side, we’re seeing continued success in having our sites indexed by G[oogle] and others, based largely on the deep relevance of the content on the sites,” says Berk, via e-mail. “The prime directive across our network is to provide rich, compelling, locally relevant content, and an ever-improving user experience.”