CALIFORNIA, USA: Yahoo Inc will pay $270 million for interclick inc as it tries to revive its ailing online advertising business, even as the search and advertising giant continues to scout for potential bidders.

New York-based interclick buys bulk-advertising space from larger players and resells them to its clients.

With the interclick buy, Yahoo will get a firmer foothold in the market for non-guaranteed inventory ads for its own properties as well as third-party websites, said Stifel Nicolaus analyst Jordan Rohan.

Large online portals like Yahoo often can't sell all their ad space through guaranteed deals as the supply of ad space exceeds demand for it. Interclick employs its open segment manager platform to analyze real-time user data for targeted advertising and helps improve yield through non-guaranteed ads.

"Yahoo needs help (in) improving yield on its non-guaranteed inventory, particularly the inventory coming from Yahoo email," Rohan said.

Yahoo is paying interclick $9 per share -- a 22 percent premium to the stock's close on Monday.

Shares of Sunnyvale, California-based Yahoo were down about 5 percent in afternoon trade on Nasdaq.

Yahoo, plagued by stagnating growth in its U.S. business and a rift with key Chinese partner Alibaba, had fired its chief executive in September and has been exploring strategic alternatives -- including a potential sale.

"Yahoo does not have much leverage right now, they got no CEO, everyone knows they are up for sale ... so how much pricing power does that give them (with potential buyers)?" BGC Partners analyst Colin Gillis said.

"It's not a transformational acquisition, but it helps Yahoo in a market they are not strong in ... they have to take some steps to keep pushing forward."

Interclick, with annual revenue of about $102 million, helps advertisers identify online target audience through its open segment manager analytics platform.

Stifel's Rohan said Tuesday's deal doesn't change the likelihood of the Yahoo sale process because "it is small enough to blend into the background."

The sale process hinges on the tax efficiency of the disposition of the Asian assets, he said.

Among the parties interested in Yahoo are private equity firms Silver Lake, TPG Capital, Bain Capital, Blackstone, Kohlberg Kravis Roberts, Providence Equity Partners, Hellman & Friedman, Carlyle Group, and Russian technology investment firm DST Global, apart from rivals Microsoft Corp and Google Inc.

Yahoo said it expects to use interclick's offerings for its own display advertising business.

The crowded advertising technology sector is dominated by a slew of small players and start-ups but has seen some of the biggest deals over the years. Google bought DoubleClick, in 2007 for $3.1 billion while eBay acquired GSI Commerce for $2.4 billion earlier this year.

GCA Savvian Advisors LLC acted as the lead financial adviser to interclick in connection with the transaction.

Yahoo shares touched a low of $14.75 in morning trade On Tuesday on Nasdaq.

Shares of interclick soared 21 per cent to $8.94.