InfoSpace To Lead The Convergence of Retailers, e-Tailers And Merchant Banks With The Acquisition Of Prio

InfoSpace will bridge the gap between the online and offline worlds by providing an e-commerce infrastructure that integrates online promotions with merchants' existing credit card processing infrastructure; Prio's current partners include American Express, Bank of America, Nova, CardService International, BellSouth and OfficeMax

REDMOND, WA — Dec. 6, 1999 — InfoSpace (NASDAQ:INSP), a leading provider of infrastructure services for consumers, merchants and wireless devices, today announced it has agreed to acquire Mountain View, Calif.-based Prio, Inc. With this acquisition, InfoSpace will be able to provide an enhanced e-commerce infrastructure that integrates online promotion technologies with merchants' existing credit card processing infrastructure, bridging the gap between the online and offline worlds.

InfoSpace's enhanced e-commerce infrastructure will target and deliver online promotions to consumers on their wireless devices or while they are looking for goods and services on Web sites. To take advantage of the promotion, the user can purchase the goods online, through a catalog or go to the retail store. InfoSpace will also be able to offer service-based merchants such as dry cleaners, plumbers and restaurants the ability to target and deliver online promotions that can be seamlessly applied offline. Using this e-commerce infrastructure, promotions are seamlessly matched and automatically credited to the user's credit card statement through secure transaction processing.

Prio has established partnerships with leading financial institutions including American Express, Bank of America, Nova, CardService International and First of Omaha; merchants including OfficeMax, Reel.com, Inc., Today's Man, Mrs. Fields Original Cookies, Inc., eflowers.com, Altman Luggage Co., Central Holidays, Steakhouse Partners (Black Angus), Foster & Gallager, Imagitel, WholesaleArt Supply Company, HealthQuick.com, Ibest Electronics and Golfbargains.com; and distribution partners including BellSouth, TicketMaster Online CitySearch, Netcentives and Knight Ridder.

Current investors in Prio include Microsoft Corporation, Intel, American Express, DataCard Corporation, Knight Ridder, SOFTBANK and VeriFone (Hewlett-Packard).

"The market opportunity for a promotional service to drive additional commerce both on the Internet and with the larger, firmly entrenched offline market is huge. Over 80% of all Internet users research products online and purchase products offline," said Naveen Jain, chairman and CEO, InfoSpace. "By offering this innovative service, we are in a very strong position to successfully bridge the gap between the online and offline worlds."

"InfoSpace already has access to millions of local merchants through its established relationships with the regional bell operating companies (RBOCs) and also has an established distribution network of over 2,100 Web sites," said Ashok Narasimhan, chairman and CEO, Prio, Inc. "Our technology is already available to over 4 million merchants and over 30 million consumers through our existing relationships. Together, we can now turn every 'brick and mortar' business into a 'click and mortar' business."

Under the terms of the acquisition, which will be accounted for as a pooling of interests, InfoSpace will exchange 2,685,000 shares of common stock for all of Prio's outstanding shares, warrants and options. The historical operations of Prio are material to InfoSpace's results of operations, therefore, prior period financial statements will be restated for this acquisition. The acquisition is expected to be completed in Q1 2000, and is subject to customary conditions, including the receipt of regulatory approval and Prio shareholder approval.

The local commerce opportunity is huge. According to the Kelsey Group, $3.6 trillion is transacted through the 10 million local merchants. These merchants spend at least $40 billion annually on promotions and Web-related activities.

IDC estimates that goods and services purchased over the Internet will increase from $32.4 billion in 1998 to over $235 billion in 2001. Recent industry studies from Ernst & Young, Cyber Dialogue and Forrester Research indicate that as many as 8 out of 10 consumers research products and services on the Internet, and then make their purchases offline at brick and mortar stores. While there is an increasing trend toward online shopping, consumers still have a strong attachment to traditional merchants and often shop near their home or office.

According to Forrester Research, Web merchants who deliver great online and complimentary offline shopping experiences will endear themselves to their customers, increasing brand loyalty and lifetime spending. By 2003, new technologies that track consumers' cross-channel behavior will enable brick and mortar merchants to recognize and reward customer loyalty in every store and every transaction.

About Prio, Inc.