Sunday November 22, 9:18 pm Eastern Time
AOL in talks to buy Netscape - sources
(Adds sources confirm, background, byline Pvs NEW YORK)
By Duncan Martell
SAN FRANCISCO,, Nov 22 (Reuters) - America Online Inc. is in talks to buy Netscape Communications Corp. in an all-stock deal, sources close to the talks said on Sunday, in a move that would combine two of the best-known names in cyberspace.
Such a deal would combine the multiple services of America Online, which include its 14 million-member AOL service, with Netscape's highly popular Internet browser and one of the top gateways to the World Wide Web, its Netcenter Web site.
Sources familiar with the talks said a deal could be announced before U.S. stock markets opened on Monday, but added that no definitive agreement had been reached and the deal could still fall through.
In a side agreement, Sun Microsystems Inc. -- the developer of the Java programming language, which has had a long-standing relationship with Netscape -- would partner with the acquired Netscape to distribute its software that runs and manages the server computers that power Web sites.
The Wall Street Journal and Newsweek magazine were reporting that such a deal was in the works. The three companies had been in talks all week and over the weekend, the Journal reported in its interactive edition on Sunday.
The companies declined to comment.
Any pact was likely to value Netscape at some premium to its current market capitalization of about $4 billion, sources said.
For America Online, an acquisition of Netscape would fill out its already wide reach among Internet users and potentially boost revenues from advertising with the addition of the Netcenter Web site.
America Online also operates CompuServe, Digital Cities, a local Internet service in 58 North American cities, ICQ, its recently acquired Internet chat system used by roughly 10 million active users and AOL International in Europe, Japan, Canada and Australia.
Sun Microsystems would in turn gain access to Netscape's popular software used to run server computers to power Web sites as it seeks to extend the reach of its Java programming language, already a staple on the Internet for animating Web pages.
''There are two aspects to Netscape's business, a media component and an enterprise (software business) component. Were something to happen, they would have to find separate homes,'' said Daniel Rimer, an analyst with Hambrecht & Quist in San Francisco, who tracks Netscape.
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