Shares in search engine companies surge

Shares of search engine companies surged after Yahoo announced it is to buy Overture Services for $1.63bn (€1.44bn) in stock and cash.

As part of the deal, Yahoo will pay $4.75 in cash for each Overture share.

Overture shareholders will also receive $0.6108 shares of Yahoo, working out at a 13% premium above Overture's stock close on Friday.

Yahoo closed at $32.19 on Friday and Overture traded at $21.51. Shares of Overture jumped 10% to $23.73 in recent trading.

Overture's other big customer is Microsoft's MSN and Web browser and shares of LookSmart ran up 16% to $3.88 on speculation that Microsoft might snap up its search partner.

Just like Overture, LookSmart relies heavily on Microsoft for much of its distribution.

Other search companies rose as well.

FindWhat.com and Ask Jeeves gained 6% and 7%, respectively.

The news comes one week after Yahoo announced earnings that just met expectations.