USA Networks in Lycos merger
Stock deal to create $1.5 billion in revenue
By Steve Gelsi, CBS MarketWatch
Last Update: 8:07 AM ET Feb 9, 1999 NewsWatch
NEW YORK (CBS.MW) -- USA Networks said Tuesday it's buying Internet search portal Lycos in a deal to create a multi media powerhouse with $1.5 billion in revenue.
USA Networks (USAI) will pay roughly a 2 percent premium for Lycos (LCOS), according to people familiar with the deal that were quoted in the Wall Street Journal.
Lycos shares fell 9 3/4 to 127 1/4 on Monday, following recent rises on speculation that it would be acquired, possibly by General Electric's (GE) NBC network. USA Networks rose 3/8 to 37 15/16. Ticketmaster Online-CitySearch (TMCS), an entity of USA Networks and Ticketmaster, rose 5/8 to 57 3/4.
As part of the deal, Ticketmaster Online-CitySearch will merge with Lycos as USA Networks brings its Home Shopping Network to bear in a deal to boost e-commerce
The combined company will be renamed USA/Lycos Interactive Networks with media mogul Barry Diller, Chairman and Chief Executive Officer of USA Networks, as Chairman of USA/Lycos.
Lycos President and CEO Robert Davis will become President and Chief Executive Officer of the new company.
With a market cap of $5.5 billion, Lycos was seen as the next target in a wave of mergers. Excite (XCIT) will merge with AtHome Network (ATHM). Netscape (NSCP) is being bought by America Online (AOL)
The companies tout USA/Lycos as one of the largest e-commerce entities in the world and the only global Internet portal with local content, auctions and a direct commerce business.
USA/Lycos will have at its inception, on an historical pro forma basis, combined revenue of more than $1.5 billion, "significant" operating cash flow, and a profit before goodwill amortization, the companies said in a statement.
"On the first hour of the first day, USA/Lycos will have the immediate capacity to reach 70 million television homes, take more than 1 million transactional phone calls and ship more than 200,000 units each day," the companies said. "On the Internet, USA/Lycos will reach approximately 30 million people, nearly 50 percent of all users, through its network of Web sites."
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