9:00AM New York – CNET surges 42% in the pre-market trading after the company agrees to be sold to CBS.

CNET Networks, Inc., publisher of technology focused content has agreed to be acquired by CBS for $1.8 billion in cash. The acquisition, agreed by both parties valued the company for $11.50 per share, 32% premium from the closing price on Wednesday at $7.95. The transaction is expected to be completed in the third quarter of this year.

CBS, of late has acquiring companies on the Internet as News Corp and the company battle to increase number of visitors to the site. With the acquisition of CNET, CBS expects to have 54 million monthly unique visitors.

Based in San Francisco, California, CNET Networks owns many of the Internet’s leading entertainment, news and information sites including CNET, ZDNet, GameSpot.com, TV.com, mp3.com and CNET news.com. The company, which reported significant profits in 2007 on revenues of $406 million, has a large international footprint, particularly in China.

CNET stock has lost nearly 50% of its value in the last two years as the company had a limited benefit from the rise in Internet advertising spending. The activist hedge fund Jana Partners with very short term investment focus had been agitating for short term changes to boost its holding value. CNET increased its revenue 50% from $272 million in 2005 to $407 million in 2007 and earnings surged to $177 million from $1.84 million. But this performance was not satisfactory to some activist investors like Jana Partners.

CNET after losing money between the years 2000 and 2003 had returned to profitability since 2004. In the fiscal 2007 the company reported earnings of $176.5 million and earnings per share of $1.16 on the revenue of $405 million, the best performance since 1996. In the first quarter of 2008 ending in March the company had reported revenue of $91.5 million and a loss of $6.1 million.

CNET traded at $79 on December 17, 1999 at the time of tech and Internet bubble but since then has traded down and fell to a low of $0.85 on August 8, 2002 and recovered to $15.85 on January 6, 2006. CNET stock closed at $7.95 close on Wednesday with the company valued at $1.21 billion.

CNET stock (CNET) jumped 42% or $3.40 to $11.35 before the market open.