USAI---We could see $55 (USA Networks to buy Lycos)
(Combines takes; adds byline; adds paragraphs 4-9 with
details, Diller quotes, background)
By Eric Auchard
NEW YORK, Feb 9 (Reuters) - USA Networks Inc.
(Nasdaq:USAI - news) on Tuesday said it agreed to buy
Lycos Inc. (Nasdaq:LCOS - news) in a stock deal that makes veteran television executive
Barry Diller chairman of a new media and electronic commerce powerhouse with combined
revenues of more than $1.5 billion.
The new company, renamed USA/Lycos Interactive Networks Inc., will combine Lycos with
USA Networks' Home Shopping Network and Internet Shopping Network/First Auction units
with USA's majority interest in Ticketmaster (Nasdaq:TMCS - news).
Under terms of the deal, USA Networks will control 61.5 percent of the company, Lycos
shareholders will hold 30 percent and Ticketmaster holders 8.5 percent, the three companies
said in a statement. Precise exchange ratios were not disclosed.
Lycos stock dropped $22.25 to $105.00 a share, while USA Networks stock rose $4 to
$41.94 a share.
USA/Lycos will have the reach of a national cable TV network combined with the broad range
of Internet media, communications and commerce capabilities.
''This places all the necessary ingredients for electronic information and commerce...into one
centrally and aggressively managed enterprise,'' USA Networks Chairman Barry Diller said in
the statement.
''There is no excuse now for us not to be a dominant player as the world continues its transition
toward interactive systems.'' Diller will be chairman of the new company and Robert Davis,
president and chief executive of Lycos, will serve the same roles in the merged USA/Lycos.
The deal caps weeks of speculation about whether Lycos was seeking to merge with a major
media company, or form a partnership in exchange for a large investment in the company.
Until last week, Lycos was said to have been in ''serious talks'' on such a partnership with
General Electric Co.'s (NYSE:GE - news) NBC network, according to a source familiar with
the talks. Other reports paired them with Time Warner Inc. (NYSE:TWX - news) and German
publishing and media giant Bertelsmann AG (quote from Yahoo! UK & Ireland: BTGGg.F).
Investors more than doubled the price of Lycos shares in the past month, sending the stock
above $145 from below $58 early in the year. The stock closed at $127.25 in Monday trading
on the Nasdaq stock exchange.
The deal offers enormous potential for cross-promotion between television and the Internet.
USA/Lycos television will have the capacity to reach 70 million homes. Its Home Shopping and
Ticketmaster properties will be able handle more than one million telephone transactions and
ship more than 200,000 items each day.
On the Internet, USA/Lycos will reach about 30 million people, nearly 50 percent of all users,
through its network of Web sites.
The company will operate four of the top 20 Web sites including Lycos, a leading ''portal,'' or
central starting point for finding news, electronic mail, online shopping and discussion groups,
and Web searches.
Its Ticketmaster Online-Citysearch business runs a network of 19 online city guides in the
United States and Canada.
The deal is subject to regulatory approval and a vote by Lycos shareholders. Internet venture
fund CMGI Inc. (Nasdaq:CMGI - news) agreed to vote its 20 percent stake in Lycos in favor
of the deal. The market capitalization of the three companies was around $20 billion based on
Monday's closing stock prices.
Seagram Co. Ltd. (Toronto:VO.TO - news) owns 45 percent of USA Networks.
More Quotes
and News:
CMG Information Services Inc (Nasdaq:CMGI - news)
General Electric Co (NYSE:GE - news)
Lycos Inc (Nasdaq:LCOS - news)
Seagram Company Ltd (Toronto:VO.TO - news)
Ticketmaster Online CitySearch Inc (Nasdaq:TMCS - news)
Time Warner Inc (NYSE:TWX - news)
USA NETWORKS (Nasdaq:USAI - news)
Related News Categories: IPOs, US Market News
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