Feeds

Lycos/USA Networks merger collapses

Concerted effort from key investors brings deal to an end

  • alert
  • submit to reddit

Maximizing your infrastructure through virtualization

Update A tremor of unease that in turn triggered an avalanche of investor dissatisfaction appears to lie at the heart of the failed merger between the diversified media company USA Networks and the Web portal Lycos, as revealed earlier today by The Register. Both companies appeared to have underestimated the reaction of Lycos investors who were angry that they wouldn't be getting a hefty premium from the deal as has been the case in other high-profile Internet mergers. But sources close to the deal told The Register the deal had now been thrown in the bin. What's more, Lycos investors believed that the deal favoured USA Networks shareholders which further undermined their confidence. As a result, they began to vote with their feet almost as soon as the deal was announced forcing shares in Lycos to plummet $33 on Tuesday. Shares lost a further $7 on Wednesday but rebounded yesterday by $16 to close at $103.25. And it appears that shaky investor confidence soon gave CMGI, the venture capital firm that owns 20 per cent of Lycos, a severe case of the jitters. Yesterday, the company is reported to have said that it wouldn't vote for the deal if Lycos' stock price didn't recover from the 31 per cent drop it suffered immediately after the planned deal was announced. In an attempt to steady situation and at the request of Nasdaq market officials CMGI issued a statement saying it was "generally supportive of the Lycos/USA Networks transaction as previously reported, but reserves the right to reassess its position as developments unfold." Despite this lukewarm response few people thought it would lead to the deal being scrapped. Early this morning reports from the US quoted Lycos chief executive Robert Davis trying to talk up the deal after meeting with key investors yesterday. He said that support for the deal was gaining momentum among investor and that any initial nervousness was understandable due to the complexity of the deal. Neither company has released an official statement regarding the collapse of the deal. ®

The Power of One Infographic

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
US freemium mobile network eyes up Europe
FreedomPop touts 'free' calls, texts and data
prev story

Whitepapers

Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.