CMGI: Lycos has other suitors
Opposed to the USA Networks-Lycos merger, stockholder CMGI talks up alternative partners -- but won't name names.
By Reuters
March 15, 1999 12:31 PM PT
NEW YORK -- Internet venture fund CMGI Inc., which opposes the terms of the proposed merger between Lycos Inc. and USA Networks Inc., Monday said other companies had expressed interest in buying Lycos.
'[The Lycos-USA deal] took away 35 percent of the value we had built up. So, it's not a very good deal'
-- CMGI Managing Director Peter Mills
However, CMGI Managing Director Peter Mills declined to name any potential suitors in comments to reporters and investors, following a presentation at the PaineWebber Mass Market Internet investor conference here.
"From our perspective (the Lycos-USA deal) took away 35 percent of the value we had built up. So, it's not a very good deal," Mills said in response to a question. "Interested parties have stepped forward. Obviously, the market does not like it, so let's look at what might make better sense."
CMGI (Nasdaq:CMGI), the largest Lycos (Nasdaq:LCOS) stockholder with an 18.5 percent stake, has said the terms of the USA (Nasdaq:USAI) deal short-change shareholders of Lycos, a popular network of Internet sites.
Lycos committed to USA deal
Both Lycos and media company USA said they had no comment regarding CMGI's statements. Lycos, however, said it remains committed to the deal with USA.
In February, Lycos agreed to merge with affiliates of USA in a deal then valued at $17 billion to $18 billion, forming an interactive entertainment and e-commerce giant to be headed by veteran television executive Barry Diller.
Lycos shareholders, however, were disappointed the merger would not carry a hefty premium for them, triggering a roughly 40 percent drop in Lycos shares in the last month.
Last week, CMGI Chief Executive David Wetherell resigned from the Lycos board to protest the terms of the USA deal and announced that his company had hired investment bank Morgan Stanley to oppose the merger.
CMGI had said it was seeking alternative bids for Lycos and would push Lycos to consider merging with Internet companies or traditional media players, among other possibilities.
Under the terms of the USA deal, Lycos would merge with Home Shopping Network and Ticketmaster Online/CitySearch Inc., among other USA Networks properties, to form a new company known as USA/Lycos Interactive Networks Inc.
Oft-cited would-be buyers of Lycos include Time Warner Inc., CBS Corp., General Electric Co.'s NBC unit and Bertelsmann AG.
Lycos an 'attractive' buy
Analyst Dawn Simon, of Brown Brothers Harriman, said Lycos would be attractive to an international media company and that the list of possible suitors should not be confined to domestic companies.
"It would make sense for it to have multiple media partners or one global media partner," Simon said.
CMGI shares were up $16.50 to $180.50 in Nasdaq stock market trading early Monday afternoon, rebounding from a sharp decline late last week. Lycos shares were up $5.81 to $104.44 on the Nasdaq as speculation continued that a more favorable deal may emerge. USA Networks shares were down 44 cents at $37.50.
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