CMG Information Services Inc, the largest shareholder in Lycos Inc, appears to wavering on whether to support the web portal company’s blockbuster deal with USA Networks Inc, leading analysts to speculate that a sweeter deal could materialize. After reports had circulated Thursday that CMGI – which owns about 20% of Lycos stock, was set to vote against the merger, the company issued a statement that was tentatively supportive of the deal. In response to a request for information from Nasdaq, CMGI said publicly that it is generally supportive of the Lycos/USA Networks transaction as previously reported, but reserves the right to reassess its position as developments unfold. Regardless of what CMGI ultimately decides to do, the mere notion that it was against the deal helped fuel a rally in Lycos shares, which jumped $16, or more than 18%, to close at $103.25 Thursday. The shares had lost 31% of their value in the previous two days, shaving about $2bn off the company’s market value. Analysts and investors – who had spurred the sell-off over displeasure with the terms of the deal – were cheered by the possibility of CMGI stonewalling the merger and pushing for a restructured agreement that gives the portal company more than the proposed 30% stake in the merged company. The current mindset on Wall Street is that without CMGI’s support, it would difficult at best for USA Networks to push the deal through. Another possibility is that CMGI’s wavering support may lead other media companies to step in with sweeter offers for Lycos. Right up until Monday’s announcement with USA Networks, speculation was rife that General Electric Co’s NBC unit would take a 35% stake in the company. Lycos had also conducted negotiations with Time Warner Inc and CBS Corp recently about possible partnerships. As one analyst told Bloomberg News, Lycos talked to everybody. Now investors are hoping that some of the would-be suitors will come forward with fresh offers.
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