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"Looksmart and BT Group have agreed to close their joint venture, BT LookSmart, which operates in the United Kingdom and Japan," LookSmart said in a statement.
"LookSmart will continue to operate independently in both markets and will integrate parts of BT LookSmart into its core operations."
LookSmart said it had agreed to pay BT $US3.5 million ($A6.26 million) in cash and one million LookSmart shares in exchange for complete resolution of the joint venture and related debt.
"In addition, LookSmart will return to BT $US1.5 million ($A2.68 million) in restricted cash that was designated solely for its funding of the joint venture, and LookSmart and BT will share equally any restructuring costs," it said.
LookSmart chief financial officer Dianne Dubois said the decision to close the joint venture significantly strengthened the company's balance sheet.
"The company is now substantially debt free and continuing to record strong growth driven by LookSmart's listings business," Ms Dubois said.
