Paul Allen's Go2Net bid falls short
By Bloomberg News
Special to CNET NEWS.COM
May 6, 1999, 2:35 p.m. PT
SEATTLE--Internet directory Go2Net said that billionaire Paul Allen has fallen short in his bid to
acquire 54 percent of the company, as shareholders rejected his offer to buy shares at a
discount.
Allen, who cofounded Microsoft with Bill Gates, still stands to own rights to more than 30 percent of shares
outstanding. He agreed on March 15 to buy 300,000 shares of series A convertible preferred stock from the
company for $300 million, 1.4 million shares of common stock from Go2Net executives and directors for $90
a share, or $126.3 million total, and to make a tender offer to Go2Net shareholders for 3.6 million shares for
$90 each, or $323.7 million.
The offer expired April 15 with no shares tendered, according to the company's quarterly report filed with the
Securities and Exchange Commission, as Go2Net shares have soared as high as 187 after Allen made his
offer.
"The reason they made the tender offer at $90 was that they were concerned the stock might drop," said
Dalton Chandler, an analyst with Needham & Company. "As it turned out, the stock didn't need any support."
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Go2Net may have been worried that investors who bought Go2Net shares expecting the company to be
acquired at a high premium would have pushed the price down after Allen's bid, Chandler said. Allen's
tender represented a 3 percent premium from the previous day's close of 87.
Allen, who wants to eventually link Go2Net with high-speed Internet access offered through the cable
television empire he is building with his Vulcan Ventures investment company,
has already purchased 167,507 shares of the preferred stock. He is expected to
complete the purchase of the remaining 132,493 shares of preferred stock by the
end of June, pending shareholder approval. The 300,000 shares of preferred
stock can be converted into 4.54 million shares of common stock for $66.11 a
share.
Go2Net will hold a shareholders meeting June 17 to vote on Allen's purchase of
the remaining preferred shares, his purchase of the common stock from company
insiders, and expanding the company's limit on shares outstanding.
Allen will likely still have the right to appoint a majority of directors, Chandler said.
The appointments are expected once he finishes his purchases of the preferred
stock.
Go2Net shares fell 11.5 to 133. The shares have soared almost eightfold this year on optimism spurred in
part by Allen's purchases. The company's revenue more than doubled to $4.33 million from $1.54 million in
its fiscal second quarter, the most recent results.
Seattle-based Go2Net runs a network of Web sites, with Internet directories, financial information, games,
and free sites for small businesses.
The company had 12.7 million shares outstanding as of March 31.
Copyright 1999, Bloomberg L.P. All Rights Reserved.
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