Internet portal Lycos' proposed acquisition of Wired Ventures, former owner of techno-trendy's bible, Wired magazine, has begun to look as unlikely as the company's proposed merger with USA Networks. Again, the problem appears to be shareholders unhappy with the deal. Yesterday's Boston Herald reported that a group of Lycos' smaller shareholders are considering legal action against the company. Their beef centres on the complex acquisition proposal drawn up between Wired and Lycos, which would yield to some of Wired's largest backers a rather higher return on their investment than everyone else would get. Essentially, the deal involved a recapitalisation which reduced the value of the company's founding shares, and that in turn allowed more recent investors to expand their share of the company at the last minute. The recapitalisation is currently under review by the US Securities and Exchange Commission. Both Lycos and Wired bosses were yesterday keen to state their support for the acquisition, which would leave Lycos with the popular Hotbot search engine site and the WebMonkey Web design site, plus Hotwired, Wired News and other online properties. Lycos has already started building Hotbot into its own sites. The acquisition of these sites was, of course, one of the features that made Lycos so attractive to USA Networks. That deal is undergoing a rough ride of its own, but a collapse of the Wired deal is so unlikely -- even the minority shareholders who are complaining about the recapitalisation want it to go ahead, albeit on fairer terms -- that these latest ructions will do little to change the minds of investors opposed to the USA Networks merger. ®