In a curious turn of events that bears out the wide-ranging appeal of internet-related companies, Excite Inc has turned down an unsolicited acquisition offer from Zapata Corp, a Houston- based company that owns fish oil processing and food packaging businesses. Zapata’s offer, which was faxed to Excite Wednesday evening, was $72 per share in newly issued Zapata shares, representing a 20% premium over Wednesday’s closing price of $60.1875 and valuing Excite at $1.7bn. Zapata shares are currently trading at just under $11. Excite spurned the offer due to what it called the complete lack of synergy between the two companies’ businesses and the vast disparity in the market capitalization of the two. Excite is currently valued at about $1.3bn, while Zapata is valued at roughly $250m. Zapata, which recently announced a name change to Zap Corp, has begun a curious transformation from a food processing concern to an internet company, and aims to rapidly and aggressively acquire and consolidate many of the internet’s leading businesses into a global leader, according to a company mission statement. If this actually happens, it would be the second about-face for Zapata, which began life as an oil and gas company in 1953, after its founding by former US President, George Bush. To further its goal of becoming a dominant factor in the internet business, Zapata earlier this month ran a national newspaper ad campaign seeking to acquire web sites. The company says it’s had “tremendous reception” to the campaign and is evaluating various acquisitions. Excite’s reaction to Zapata, however, was swift and somewhat mocking in tone. It said in a statement that it believes the proposal is not feasible, would be vastly dilutive and holds no possible value for Excite’s shareholders. It also titled its Thursday morning press release simply Excite Declines to Acquire Food Processing Company. A spokesperson for the company dismissed the bid as merely a publicity stunt. Zapata, for its part, was playing the good guy, saying it would only pursue a transaction on a friendly basis and with the approval of Excite’s board. Most analysts also dismiss the whole thing as merely a way for Zapata to draw attention to itself and its new business plan, but the company insists it was a serious play. At any rate, if publicity was the objective, the objective has been met.
