USA Networks, Lycos, Ticketmaster Online Terminate Merger
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"It's time for Lycos to move on," said Lycos Chief Executive Officer Bob Davis.
The union faced several obstacles, most notably the opposition of Lycos shareholders, who wanted a better price for shares. The largest Lycos shareholder, venture fund CMGI Inc., sought to block the deal claiming Lycos shareholders could have gotten a better deal.
"We are gratified that Lycos shareholders will now have new avenues to realize appropriate value for their shares," Wetherell said.
During a press conference Wednesday, Davis described his relationship with Wetherell as, "cordial, friendly and respectful," but added that Wetherell won't be back on the company's board of directors.
Just days after the merger announcement, Lycos shares dropped sharply, with disgruntled investors selling off shares of Lycos stock. The merger had been valued at approximately at between $17 billion to $18 billion.
"A lot of people misjudged the transaction," Davis said. "I did and Barry Diller and others did.
"Despite the controversy of the merger, it was an exceptional period for the company, during which we achieved several milestones," Davis said.
He also said the company's fiscal third quarter results, due out next Tuesday, would reflect the company's growth and said investors could "expect a solid quarter."
The companies announced Wednesday that the option agreement between USA Networks and Lycos, also part of the merger agreement, has been terminated.
Provisions of the termination agreement require Lycos to pay USAi and Ticketmaster-CitySearch $35 million if Lycos reaches a deal with another party before July 15.
Also, subject to certain exceptions, USAi and Ticketmaster-CitySearch each have agreed that until July 15, neither will acquire Lycos stock or make any proposals to acquire Lycos.
As part of today's news, USAi, TMCS and Lycos announced an agreement in which TMCS and Lycos will enter into a distribution and commerce relationship.
Under that alliance, CitySearch will provide local content for Lycos' national network, Ticketmaster Online content will be featured on Lycos sites and links will be provided to the Ticketmaster Online-CitySearch site.
The companies said they are investigating additional options in developing a cooperative program to create a local commerce platform for the 15,000 businesses hosted by CitySearch and its partners.
In addition, the agreement calls for USAi and Lycos to exchange cross-promotional initiatives involving the Lycos sites and USAi's media assets.
Davis dismissed the idea that Lycos would partner with another company any time soon.
"The lesson I learned during this process is that speculation is a dangerous thing. We're going to concentrate on building up business."
On that front, Davis said new acquisitions are imminent for Lycos.
"We're looking at a number of things, but nothing's final. You can be clearly looking for us to be aggressive on that front. We're looking at companies that will help us build audiences, furthering our reach in traffic, and also commerce companies."
Also on the horizon for Lycos is that by late summer or early fall, the company becomes "poolable," Davis said. Currently CMGI's ownership stake is about 18 percent of Lycos. CMGI previously held a 50 percent stake in the company, and therfore it could not use the pooling of interest accounting method. There is a two-year waiting clause for companies to pool interests if a majority company owns another company and spins it off. Since pooling of interests enable companies to combine their results without denting future earnings, some analysts predict Lycos will emerge as an attractive take-over entity once it is poolable.