IAC/InterActiveCorp on Monday said it has agreed to acquire search engine Ask Jeeves Inc. in a stock deal valued at $1.85 billion, launching the e-commerce conglomerate into the highly competitive search market.

Under the deal, IAC would issue 1.2668 shares of common stock for each Ask Jeeves share. IAC plans to buyback at least 60 percent of issued shares, as part of a previously authorized share repurchase program.

The acquisition, valued at $1.85 billion, is expected to be completed either late in the second quarter or early in the third quarter, pending regulatory approval and approval from Ask Jeeves shareholders. Ask Jeeves would remain an independent brand and operate out of its Oakland, Calif., headquarters. Chief executive Steve Berkowitz would continue to head the company.

As a part of IAC, Ask Jeeves, a lower-tier search company battling far larger rivals Google Inc., Yahoo Inc. and Microsoft Corp.'s MSN, would benefit from IAC investment in distribution, research and development, technology and infrastructure and international markets, officials with New York-based IAC said. The Ask Jeeves search box would be promoted on every IAC site.

In addition, Ask Jeeves would have access to new search-revenue models through the integration of IAC brands and services into the Ask Jeeves properties, IAC said. The would-be parent company also said it planned to build the "best local search, content and merchant information on the web" within the search engine.

"We believe that in the future (Ask Jeeves) has the potential to become one of the great brands on the Internet and beyond, and by beyond we mean in wireless, in the search for anything on any device," Barry Diller, chairman and chief executive of IAC, said in a statement.

IAC is not new to search. Local search engine Citysearch is one of its online properties. Other IAC e-commerce sites include Expedia and Hotels.com, which offer travel services; LendingTree and RealEstate.com, home loan and real estate services; and Ticketmaster, which sells tickets to a variety of sports, entertainment and other events. IAC also owns the Home Shopping Network.

Reaction to the deal was mixed, search analyst Allen Weiner of market researcher Gartner Inc. believe the acquisition would drive Ask Jeeves into the entertainment portal business dominated by Yahoo and MSN.

"Diller is looking for a platform for building synergies between all of IAC's content sites, and this is it," Weiner said. "For a relatively good price, he has found the platform he's been looking for."

By drawing on visitors from IAC's other sites, Ask Jeeves stood a good chance of boosting its user base, which is far behind the industry giants, Weiner said. MSN, for example, draws 110 million unique visitors a month, while Ask Jeeves is about 42 million.

Others, however, were not so optimistic.

Mark Mahaney, financial analyst for American Technology Research, said in a report that Ask Jeeves was "solid third or fourth tier search player" with only about 5 percent of total search volume in the United States.

"We're initially skeptical that IACI's efforts (brand spend, cross-promotion, etc.) can materially improve Ask Jeeves's market-share position," Mahaney said.

For IAC, Mahaney viewed the deal as "neutral," saying that the company has had difficulties integrating its other numerous acquisitions.

"Our view is that IACI's record of generating revenue synergies has been limited to date," Mahaney said.

Ask Jeeves differentiates itself in the search market by providing answers to natural-language questions, such as "who is the Abraham Lincoln?" Competitors offering a similar approach include Answers.com, which is owned by GuruNet Corp.

IAC expects to complete the acquisition of Ask Jeeves before its planned spin-off of its travel businesses. Last year, Ask Jeeves reported $53.2 million in profits on revenues of $261.3 million.