<<OT: Fresh Red Herring Article About Fishy Zapata Offer...>>
Just pulled this off the RH site. Kind've funny to
read...
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ZAPATA MAKES FISHY OFFER FOR EXCITE
By Dan Mitchell
May 21, 1998
Former fish-oil producer Zapata Corp.'s (ZAP)
remarkable $1.7 billion offer Wednesday night to buy
Excite wasn't exactly a hostile takeover attempt --
more like passive-aggressive.
Zapata -- which had no prior dealings with Excite (
XCIT) -- made the offer via a letter faxed at 6 p.m. to
Excite CEO George Bell. Zapata said it wanted buy
Excite in an all-stock deal for about $72 per Excite
share, about a 20 percent premium, but only if it were
"mutually acceptable."
It wasn't. Excite's response was immediate and terse.
This morning, it issued a press release: "Excite believes
that the proposal is not feasible, would be vastly
dilutive, and holds no possible value to Excite's
shareholders," it said in part. The statement noted the
"complete lack of synergy" between the Web portal
firm and the Houston oil
company-cum-food-processor-cum-Internet firm. In a
bit of turnabout, the statement was headlined "Excite
declines to acquire food processing company," and it
noted the wide disparity in the firms' market caps:
Zapata, $250 million; Excite, $1.3 billion. And Zapata
would have had to issue perhaps up to 100 million
fresh shares to do the deal.
Mighty morphin' new media rangers
Zapata, founded as an energy company in 1953 by
George Bush, in recent years had morphed into a
processor of fish byproducts. Now, it has big plans to
change again, this time into an interactive-media
company. Last month, it spun off the fish-processor,
Omega Protein, in an IPO. On April 27, the company
announced that it had acquired Word and Charged,
two struggling Webzines, from Icon CMT (ICMT), an
Internet service provider and Web-hosting company.
So, why should this company, so new to the Net,
make such a big play now? Zapata wouldn't say, but
Excite has a guess: "This was an annoying publicity
stunt," said Greg Clavin, Excite's investor relations
manager. "They don't know anything about Excite.
They're just trying to get their name out there. And it's
working."
Whatever its precise intentions, Zapata has signaled
that it has grand designs to become a major Internet
player. As part of its deal to acquire Word and
Charged, the company contracted with Icon CMT to
provide Zapata with Web-hosting and Internet
connectivity. Zapata -- which is changing its name to
Zap -- says it plans to make several acquisitions to put
it in the media and e-commerce spaces.
Zapata recently began a promotion, running ads several
national papers that read "Zapata Will Buy Your Web
Site." The ad noted that it has more than $400 million
in cash and stock, ready to spend on acquisitions of
Internet companies.
No one at Zapata could be reached for comment
Thursday, but Icon CMT CEO Scott Baxter defended
the firm. "A lot of people are getting this wrong," said
Mr. Baxter, whose company would have benefitted
handsomely if the deal went through. Despite all the
tittering in the press on Thursday, "this is a company
with a lot of money, they're serious, and they're ready
to invest," he said. Far from an Internet na‹f, Zapata
CEO Avram Glazer "knows what he's talking about,"
Mr. Baxter added. When Mr. Glazer made his pitch to
Icon, "this man showed up with his homework done.
He was obviously a guy who was going to go after
more and more of this stuff, and I said, 'I'm going to go
along with this guy.'"
Nothing about Net
Nonetheless, Zapata has owned up to its inexperience
on the Net. In its most recent 10-Q statement filed with
the Securities and Exchange Commission, the company
notes as a "risk factor" that "current management has
no operating experience in owning and operating
Internet and e-commerce businesses." Such experience
will be gained in hiring people through acquisitions,
according to the statement.
For now, except for the Web zines, which are still
dormant, Zapata is merely a shell corporation. It owns
60 percent of the outstanding shares of Omega Protein,
and it holds a 40 percent stake in Envirodyne
Industries, a food-packaging firm.
The Glazer Family Trust, headed by Avram's father
and Zapata chairman Malcolm Glazer, holds 45
percent of Zapata. The family also owns the Tampa
Bay Buccaneers NFL franchise.
The company has seen some legal trouble. There are at
least two lawsuits pending against the firm, one 1995
shareholder class action alleging that the Envirodyne
stock was purchased to personally benefit Malcolm
Glazer. The suit claims that the purchase -- as well as
an aborted attempt to buy Houlihan's Restaurant
Group -- had an adverse affect on the company's
stock. Another 1995 suit led by former director Peter
M. Holt alleges that the company misrepresented itself
in its 1993 sale of Energy Industries Inc.
The Glazers came to Zapata in 1993 after Malcolm
himself sued the company as a shareholder. His claim
was that the company's $111 million bid for a Bermuda
firm would have diluted his stake in the company. The
bid failed, and Malcolm and Avram negotiated board
seats for themselves. A year later, Malcolm ascended
to the chairmanship and Avram was named president
and CEO.
Zapata's stock closed at 10.5 Thursday, down 0.875,
a 7.7 percent drop. Excite gained 0.81, to 61. |
