Lycos Falls Hard After Merger News
SAN FRANCISCO -- Shares of Lycos (LCOS Quote) dropped sharply after the company put an end to merger speculation by agreeing to join with Barry Diller's USA Networks (USAI Quote).
Investors weren't enthusiastic. Lycos shares slid 22 3/4, or 18%, to 104 1/2, while USA shares added 3 13/16, or 10%, to 41 3/4, and USA's Ticketmaster Online-Citysearch (TMCS Quote) unit dropped 7 5/8, or 13%, to 50 1/8. CMGI (CMGI Quote), which owns 20% of Lycos, was down 7 at 102.
Under the agreement, USA Networks shareholders will own 61.5% of the company, to be called USA-Lycos Interactive. Lycos shareholders will own 30% and shareholders of Ticketmaster-Citysearch will own 8.5%. USA will pay a 2% premium over the price of Lycos' stock as of Monday's close, which may have been a disappointment to some shareholders.
The merger "certainly was not unexpected," said Stephen Franco, an Internet analyst with Piper Jaffray. "It didn't have to happen this soon, but longer term Lycos certainly did need access to a broader distribution platform." ...
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