The online merger frenzy continues with the announcement that Lycos is involved in a three-way merger with USA Networks and Ticketmaster Online-Citysearch, creating an e-commerce giant leveraging both the Internet and cable television.
Under the terms of the complex deal, Lycos will merge with Ticketmaster Online-Citysearch, in which USA Networks holds a controlling stake. USA Networks will also add its other e-commerce assets, including the Home Shopping Network (HSN) cable television unit, into the combined company which will be called USA/Lycos Interactive Networks, the companies said in a statement.
Financial details of the agreement were not immediately available. The merger is expected to be completed in the second quarter of this year.
Barry Diller, chairman and CEO of USA Networks, will become the chairman of USA/Lycos, while Robert Davis, president and CEO of Lycos, will become president and CEO of the new company.
"We've created the framework for becoming the largest e-commerce entity," Davis said during a press conference.
On a historical pro forma basis, USA/Lycos will have combined revenues of more than $US1.5 billion, the companies said. On its first day of operation, it will have the capacity to reach 70 million television homes and approximately 30 million Internet users through its Web sites, according to the statement.
USA Networks will hold a majority 61.5 per cent stake in the new company, with Lycos shareholders owning a 30 per cent stake, and Ticketmaster Online shareholders other than USA Networks holding the remaining 8.5 per cent, the statement said.
The announcement is the latest in the Internet portal merger frenzy that kicked off last June when the Walt Disney bought a 43 per cent stake in Infoseek for $70 million by selling its interest in Web developer Starwave to the portal.
Last month, @Home announced its intention to purchase Excite for an all-stock transaction valued at $US6.7 billion. The deal followed a surprise announcement in November that America Online (AOL) would buy Netscape Communications.
Earlier this month, speculation arose that NBC might take a 35 per cent stake in Lycos and merge NBC's Snap portal with Lycos. Other names circulating as potential Lycos suitors included Time Warner and Bertelsmann AG.
Lycos' Davis, meanwhile, has publicly maintained that the company would remain independent.
Lycos' stock price has benefited from all the rumours, which have helped raise the company's market capitalisation to over $US6 billion.
The deal must still be approved by regulators and Lycos shareholders, but Lycos' largest shareholder, CMG Information Services, which owns about 20 per cent of Lycos, has said it supports the deal, according to the statement.