Brian,from WSJ today: DOJ and AOL/NSCP deal:Any comments? TA
Regulators Seek Information
On AOL-Netscape Merger
By PAUL M. SHERER and KARA SWISHER
Staff Reporters of THE WALL STREET JOURNAL Jan 15, 1999
The Justice Department's antitrust division has requested additional information about the planned $6.5 billion merger of America Online Inc. and Netscape Communications Corp., according to people familiar with the situation.
The action, a request for more information under the Hart-Scott-Rodino antitrust act, doesn't mean it will attempt to block or modify the deal, but it does indicate heightened scrutiny. The government is expected to study how the deal might affect competition in the market for Internet software and online services. The request comes as the government pursues its antitrust case against Microsoft Corp. Its executives have criticized the government for failing to challenge AOL's earlier acquisitions of online-service competitors such as CompuServe and
Mirabilis. And U.S. District Judge Thomas Penfield Jackson, who is overseeing the Microsoft antitrust case, last month said the AOL-Netscape deal "might be a very significant change in the playing field as far as this industry is concerned."
Only in a small percentage of deals does the government ask for additional information, notes Victor Lewkow, a partner at law firm Cleary, Gottlieb, Steen & Hamilton. However, observers say that given the government's antitrust action against Microsoft, and the fact that this is the highest-profile deal so far in the Internet arena, its scrutiny isn't surprising.
Under the Hart-Scott-Rodino act of 1976, all mergers must be submitted to the Federal Trade Commission and the antitrust division of the Department of Justice for review before they are completed. If the government doesn't ask for additional information within 30 days of the filing, the merger may proceed. If the government does request more information, federal regulators have 20 days after the second filing to try to block the deal.
AOL and Netscape officials Thursday declined to comment, as did a Department of Justice spokeswoman.
Under terms of the deal announced Nov. 24, each share of Netscape would be exchanged for 0.45 shares of AOL, valuing the deal at about $4.3 billion at that time. AOL shares have since soared; at Thursday's close, the deal is valued at $6.5 billion. Netscape executive Barry Ariko was quoted earlier this week as saying the deal is expected to close by April.
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