Updated from 3:17 p.m. EDT

Excite@Home

(ATHM) - Get Report

, a leading U.S. high-speed Internet firm, said it is merging its international business with Dutch broadband company

Chello

, a subsidiary of worldwide cable operator

UPC

(UPCOY)

, in a deal aimed at creating the largest high-speed Internet firm outside of North America.

The combined company, to be called

Excite Chello

, will be half owned by both Excite and UPC. Meanwhile, Chello ditched its planned IPO, which was announced March 20, and said the merged company will seek to sell shares to the public later this year or early in 2001, market conditions permitting.

In addition,

AT&T Liberty Media

(LMG.A:NYSE) said it will invest $187.1 million in the new company through a note that can later be converted into Excite Chello shares. Both UPC and Excite@Home will pump in $93.8 million each, giving the new company an initial war chest of $374.6 million.

The deal will combine Redwood City, Calif.-based Excite@Home's international portal, media and high-speed ventures with Chello's high-speed Internet operations and its exclusive access to the broadband networks of UPC and its parent,

UnitedGlobalCom

(UCOMA)

, in Europe, Asia and Latin America. With 30 million cable homes, this network represents the largest cable footprint outside North America. UPC and Chello are based in Amsterdam.

The merged company will have operations in 15 countries, with more than 300,000 broadband Internet subscribers.

Analyst estimate the new company's market value at $6 billion to $7 billion.

The deal is expected to close by the end of the year, pending regulatory approval and the close of financing. Company officials don't expect significant regulatory obstacles, as the broadband business is still in its infantile stages.

At least initially, the company will focus on signing up new subscribers rather than branching into content by signing agreements with movie studios or record labels, as is the strategy of some Internet service providers.

"Right now, it's a land grab for homes," said George Bell, chairman and chief executive officer of Excite@Home, in a conference call with the media Tuesday to discuss the deal. Bell will be co-chair of Excite Chello.

Instead, Bell said the new company believes that content agreements will fall into place once subscription rolls increase.

"Content seeks ubiquity," he said. "Content wants the greatest number of eyeballs."

Analysts praised the deal, although some cautioned that they were focused on the corporate earnings season and hadn't been able to scrutinize the deal yet.

F. Drake Johnstone, an analyst at

Davenport & Co.

who covers Excite@Home, referred to the planned IPO and described the deal as "a smart way for Excite to gain access to the capital markets for international development." Johnstone has an accumulate rating for Excite@Home and his firm has not performed underwriting.

The deal will also allow Excite@Home's current management to focus solely on developing the North American market, another analyst said.

"Bringing the two together serves the interest of both companies," said Abhi Gami, of

William Blair & Co

. "Chello is a pure play on the move to broadband." Gami has a buy rating for Excite@Home, and his firm has not provided investment banking services to the company.

The company will have its main offices in Amsterdam and London, and will focus on expanding the delivery of high-speed Internet access to consumers and businesses across a variety of platforms -- such as cable, satellite and wireless -- and to a variety of devices, from PCs to TVs and mobile phones.

Excite@Home finished up 1/8, or 0.65, at 19 11/16. UPC closed up 7/16, or 1.5%, at 30 1/8.