INTAC International and HowStuffWorks Announce Partnership to Form New Company Focusing on China's Internet Market
Hong Kong / Atlanta (April 18, 2006) - INTAC International, Inc. (NASDAQ: INTN / FSE: WKN 805768) ("INTAC"), an emerging provider of educational and career development services, software for educational institutions and distributor of wireless handset products in China, and HowStuffWorks, Inc. ("HowStuffWorks"), an online publishing company that is a subsidiary of The Convex Group and widely recognized as a leading source for clear, reliable explanations of how everything actually works, today announced a partnership to form a new company, HSW International, Inc. ("HSW International"), which will focus on the online publishing, training and education markets in China. HSW International will combine HowStuffWorks' dynamic technological platform, Internet expertise and expansive digital content resources with INTAC's local market knowledge and relationships in the wireless, education and training sectors to create an interactive media and service platform for Chinese Internet users. This platform will also provide a contextual and rich environment for brands to effectively advertise to the Chinese market.
Under terms of the Agreement and Plan of Merger (the "Merger Agreement") signed by the parties today, a wholly-owned subsidiary of HSW International will merge into INTAC with INTAC surviving the merger and becoming a wholly-owned subsidiary of HSW International. Upon completion of the merger, all shareholders of INTAC will receive the right to exchange their INTAC shares for shares of common stock of HSW International, which will be publicly traded on NASDAQ. HowStuffWorks will contribute certain assets, properties and rights to HSW International in exchange for shares of common stock. As of the effective time of the merger, but prior to the completion of the purchase of shares by the financial investors (as described below) and issuance of certain additional shares and stock options pursuant to the Merger Agreement, 50 percent of HSW International will be owned by the shareholders of INTAC and 50 percent by HowStuffWorks. This agreement will be subject to standard regulatory approvals.
In addition, INTAC's largest institutional shareholder and Carl Icahn, an investor in HowStuffWorks, have each committed $10 million to purchase shares of common stock of HSW International. StuffWorks, LLC, formed by a group of current HowStuffWorks investors, will commit an additional $2.5 million to purchase shares of common stock of HSW International. This new capital, totaling $22.5 million, will allow HSW International to rapidly create a robust online business for the China market.
"We believe this strategic partnership provides significant value for our shareholders," said Wei Zhou, CEO of INTAC. "HSW International was formed to take advantage of the vast potential of China's significantly expanding Internet market. By joining forces we will marry HowStuffWorks' technology expertise and content with our existing business in China, including our offerings in the educational and career development services we provide to millions of Chinese students, our partnership with China's Ministry of Education, the reach of our wireless distribution business, as well as our other relationships in China. HSW International has the combined strengths to take advantage of the strong demand for consumer information by building a robust online community of information seekers."
Under the Contribution Agreement for China, INTAC will have exclusive digital publishing rights to HowStuffWorks' content. These rights will include access to content obtained through HowStuffWorks' recently announced strategic alliance with Publications International, Ltd. (PIL), a 30-year-old publisher of mass-market books that sells millions of reference books globally, and has current product offerings in China. Through the alliance, HowStuffWorks has exclusive digital publishing rights to the vast PIL product library of over 10,000 books and one million images, as well as future works, access to over 350 writers and editors and the leading consumer expert review resources Consumer Guide® and Mobil Travel Guide®. These capabilities will now be localized and made accessible to Chinese consumers. Additionally, MobilTravelGuide.com will be an excellent resource for visitors during the 2008 Olympics by providing hotel, restaurant and other reviews in Beijing. The Contribution Agreement also extends digital publishing rights to INTAC in Brazil.
"In today's global economy, it is imperative for companies and brands to have the scale and reach to effectively engage with consumers and meet their information consumption needs," said Jeff Arnold, Chairman and CEO of HowStuffWorks. "The power of this business model is the combination of HowStuffWorks' tremendous digital content assets and expertise to build a scaleable technology platform, enabling rapid deployment of content, and INTAC's established distribution and relationships. Together, we will effectively enter this market and become a pioneer in providing Chinese consumers with credible content and expert reviews. Additionally, HSW International will become a vehicle to expand into other emerging international markets with the largest identified need for digital content and highest potential for growth."
China's technology market is one of the fastest growing markets in the world with approximately 111 million Internet users and 20 million new users annually. Obtaining information is among the primary purposes for using the Internet in China. Additionally, the consumer e-commerce segment in China has high growth potential. The partnership positions HSW International as a leading global explanation provider, meeting the significant demand for providing information to the large untapped community in need of content, and helps Chinese Web users by establishing a trusted and robust resource for evaluating and rating consumer products and services. In the same way that HSW International will empower Chinese Web users with trusted information to either be better informed or guide buying decisions, it will also equip local Chinese businesses with the ability to identify and meet existing and emerging customer needs through contextual Internet advertising.
INTAC and HowStuffWorks, in partnership, will offer new revenue opportunities for HSW International by offering diversified revenue streams through its Internet business, including advertising, search, e-commerce and sponsorships.
Following the closing of the transaction contemplated by the Merger Agreement, Jeff Arnold will assume the position of Chairman of HSW International, and will recruit additional executives to help transform it into an international media company. Jeff Arnold founded WebMD in 1998 and was CEO until October 2000. He is the Chairman of The Convex Group, which owns HowStuffWorks, Flexplay and LidRock, and is the Chairman and CEO of HowStuffWorks. Wei Zhou, the current CEO of INTAC, will be the CEO of HSW International, and will continue to run INTAC's core business. The Board of Directors will be comprised of seven members, with five, including Jeff Arnold, named by HowStuffWorks and two, including Wei Zhou, named by INTAC. At least four of the directors will be independent. Following the consummation of the transaction, HSW International's headquarters will be located in Atlanta, GA and Hong Kong.
About INTAC International, Inc.:
INTAC International, Inc. is a leading provider of integrated educational and career development services as well as management software products for educational institutions in China. INTAC is also engaged in the distribution of premium brand wireless handset products. INTAC is a Nevada corporation and is headquartered in Hong Kong.
For Further Investor Information:
J. David Darnell
Senior Vice President & Chief Financial Officer
For Media Inquiries:
Ogilvy Public Relations Worldwide, New York
Ogilvy Public Relations Worldwide, Beijing