News alert from WSJ:
November 22, 1998
America Online Is in Talks
To Buy Netscape in Stock Deal
In Side Arrangement, Sun Microsystems
May Take Control of Business Software
By KARA SWISHER
Staff Reporter of THE WALL STREET JOURNAL
America Online Inc. is in talks to buy Netscape
Communications Corp. in an all-stock transaction that
may also involve Sun Microsystems Inc., people
familiar with the situation say.
Financial terms weren't available. But any pact is likely
to value Netscape at some premium to its current market
capitalization of about $4 billion, these people said.
Under terms now being discussed,
AOL, of Dulles, Va., would take
over Netscape's Netcenter Web
site (www.netscape.com), as well
as Netscape's well-known
software for browsing the Web. In
a side agreement, Sun is
considering an arrangement under
which it would take control of
Netscape's business software,
paying AOL a fee for using
Netscape technology, these people said.
The three companies have been in talks all week and
over the weekend, and a final agreement may not be
reached. But some people familiar with the situation
believe a deal could be announced before stock markets
open Monday morning. If so, the arrangement would
mark a dramatic end to the independent existence of
Mountain View, Calif.-based Netscape, whose meteoric
rise and bruising battle with Microsoft Corp. have been
the subject of multiple books and historic antitrust
charges aimed at Microsoft. Such a deal also would
provide additional ammunition as AOL and Sun continue
to slug it out against Microsoft on several fronts.
Netscape's share of the browser market has declined
dramatically since late 1995, when Microsoft launched a
marketing campaign that included giving away its own
software and courting major customers. One of
Microsoft's biggest victories was convincing AOL in
1996 to use Microsoft's Internet Explorer software,
edging out Netscape in a deal that included hurting
Microsoft's own online service by giving AOL
comparable promotion on the opening screen of
Windows.
The 1996 browser deal stipulates that AOL has the right
to terminate the exclusivity clause of its relationship
with Microsoft on Jan. 1, 1999.
In trading Friday on the Nasdaq Stock Market,
Netscape's shares closed Friday at $39.875, up $2.625;
Sun closed at $67, down 25 cents, also on Nasdaq. AOL
closed at $84.875, up $1.50 in composite New York
Stock Exchange trading. |
