Houston, TX-based Internet newcomer Zapata Corp. today extended a “friendly” offer to purchase Excite Inc. for $1.68 billion in stock, an offer that was promptly rejected by the Net directory leader.
In a statement released today, Zapata said it offered the search directory giant $72 a share, equaling approximately $1.68 billion.
Excite is said to be valued at around $1.4 billion, while Zapata is valued in the $260 million range. Excite this morning was trading at around the $60 mark.
Excite said in a statement that the proposed purchase was not feasible due to “the vast disparity in the market capitalization of Excite and Zapata, and the complete lack of synergy between the two companies’ businesses.” The company added that “the proposal . . . would be vastly dilutive and holds no possible value to Excite’s shareholders.”
This is in sharp contrast to an earlier statement made by Avram Glazer, Zapata’s President and Chief Executive Officer: “This transaction
represents an excellent fit with Zapata’s new strategic direction because of Excite’s leading edge Internet technology, media properties and its high quality management.”
Glazer also observed that “the transaction makes sense for Excite’s shareholders because of the capital resources that Zapata can bring to Excite.”
Zapata, a food processing company, made a splash in the Internet world in April when it acquired cult-favorite Web zines WORD and CHARGED from Icon CMT Corp. in a $2 million deal.
Zapata said the purchase was part of a new Web initiative and strategic alliance with Icon. Included in those plans was the name change of Zapata to Zap Corp. to mark the company’s move into the e-commerce space.
