IAC/InterActiveCorp. moved a half step closer to junk status on Wednesday, after the company earlier this week said it was buying Internet search engine Ask Jeeves Inc. for $1.85 billion.

The acquisition may help Barry Diller, IAC's chairman and chief executive, knit together his disparate holdings into a more coherent and focused company, analysts say.

Ask Jeeves could funnel traffic toward other IAC holdings like Match.com, an online dating site, and LendingTree, an online mortgage lender.

But from a financial standpoint, the deal is harder for credit analysts to embrace. IAC is paying for Ask Jeeves with shares, at least 60 percent of which it plans to later buy back, so the acquisition will cut into IAC's cash holdings, which as of year-end 2004, stood at $1.16 billion.

Ask Jeeves is not a market leader in Web search, and may require additional capital expenditure, which could also cut into IAC's funds.

"The acquisition could put a strain on this credit down the road," said Steven Boothe, investment-grade technology, media, and telecom analyst at T. Rowe Price in Baltimore.

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