The merger, which saw share prices surge since being announced, will give the combined entity a global reach to challenge its arch-rival, Overture Services, as well as threaten the position of the search engine Google's own product, AdWords.
The deal will also make its founders - which include two Campaign Faces to Watch, Sebastian Bishop and James Burrows - multi-millionaires.
The pair was formerly a creative team at Rainey Kelly Campbell Roalfe and Publicis before leaving in July 2000 to set up Espotting.
"The merger happened because of the high number of similarities between the two companies," Bishop said. "This gives us global reach and gives advertisers using both our companies that reach."
Under the deal, Espotting shareholders receive 8.1 million shares of FindWhat.com stock and around $27 million in cash, depending on the value of Espotting's audited net assets and losses.
Espotting shareholders will own 30 per cent of the new company.
The company works by enabling online advertisers to bid for the per-click fee they will pay for their link to appear. The ads are then distributed through the search areas of internet portals. Advertisers can bid against each other for key words or phrases.
As well as in the UK, Espotting has operations in Germany, France, Spain, Italy, Sweden, Denmark, Norway, Ireland and Switzerland.