I bought some lcos today. Seems CMGI ain't gonna vote "yes" with their 20% stake. #reply-7778074
Lycos Biggest Shareholder Won't Support Purchase at Current Stock Price
Lycos' Top Shareholder May Reject USA Networks' Offer (Update2)
(Adds company, shareholder and analyst comment in 6th
through final paragraphs. Updates share activity.)
Andover, Massachusetts, Feb. 11 (Bloomberg) -- CMGI Inc.,
the largest shareholder of Lycos Inc., said it won't vote for USA
Networks Inc.'s proposed acquisition of the No. 3 Internet search
directory at current stock levels, wavering from its initial
decision to support the complex transaction.
Lycos shares jumped as much as 21 percent after Lycos told
Bloomberg News that CMGI might not support the purchase. Lycos
climbed 12 13/16 to 100 1/16 in midafternoon trading. Earlier,
shares touched 105 7/8. USA Networks rose 5/8 to 39 7/8. CMGI
rose 12 3/16 to 104 1/4 after touching 105 1/2.
Lycos lost almost one-third of its value between Monday,
before the proposed acquisition was announced and yesterday.
Investors were confused by the transaction and couldn't see a
clear benefit. CMGI, which owns 20 percent of Lycos, didn't
disclose how high the shares would have to go before it would
favor the takeover by USA Networks, the media company owned by
Barry Diller. CMGI invests in Internet start-up companies.
CMGI's ''view is that the deal is undervalued,'' Lycos Chief
Financial Officer Edward Philip said in an interview.
CMGI's executives said ''they won't approve the deal if the
stock stayed where it is,'' CMGI spokeswoman Deidre Moore said.
Combination
USA Networks plans to combine Waltham, Massachusetts-based
Lycos with its cable-TV Home Shopping Network, Ticketmaster
ticketing service and Internet operations such as Ticketmaster
Online-Citysearch Inc. and First Auction.
CMGI had voted in favor of the acquisition earlier this
week.
''CMGI voted for the transaction at the board level and
continues to support the transaction,'' USA spokeswoman Jennifer
Goebel said today. She declined to elaborate.
Lycos' shares had reached an all-time high of 137 last
Friday on speculation that a media company would buy it or invest
in it. Lycos investors were expecting a substantial premium for
their shares.
''The deal's a tough sell,'' said Ryan Jacob, portfolio
manager of the Internet Fund, a New York-based mutual fund that
owns Lycos shares. ''With CMGI not supportive of the deal, it
will be very hard to bring the deal to completion. The onus is on
(Lycos) to sell the deal.''
Lycos President Bob Davis was unavailable to comment. He is
meeting with large investors and analysts over the next two
weeks, trying to convince them of the acquisition's merits. The
shareholder vote won't take place for three or four months.
''It's not as simple as stock-for-stock deal, so people are
confused,'' Lycos CFO Philip said.
Other media companies might step in with a better offer now
that Lycos' largest shareholder is waffling in its support,
analysts said.
''Lycos talked to everybody. Other players could be
scratching their heads and reevaluating their offerings,'' said
PaineWebber analyst Jim Preissler, who rates Lycos a ''hold.''
Lycos had talked with General Electric Co.'s NBC division,
Time Warner Inc. and CBS Corp. about a possible partnership
before agreeing on its proposed acquisition by USA Networks. |
