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  1. Technology
February 21, 1999


By CBR Staff Writer

Lycos Inc is remaining tight-lipped over the problems facing the closure of its deal to acquire Wired Digital, which we documented last week (02/18/99), and which could have a negative impact on the already perilous acquisition of Lycos by USA Networks Inc. Lycos has not returned our calls on the matter, but Reuters managed to get a response from someone at the company, who told the news agency that the deal is not in trouble, it’s just under review with the SEC and the company still thinks the deal will close. Additionally, there have been no lawsuits filed by shareholders. The Boston Herald – Lycos’ hometown newspaper – managed to get a squeak out of Wired Digital co-founder and shareholder Jean Metcalfe, who said that there had been letters going back and forth, but no lawsuits filed yet. Lawsuits are thought to be in the front of the minds of Wired’s veteran shareholders, who hold either common stock or class A shares. They will find themselves faring pretty badly from the deal compared to the class B and C shareholders, who invested in the company later. The newer shareholders look like they will be appropriating much of the Lycos stock being used to pay for the deal, which valued Wired at $83m last October (10/07/98). The potential effects on the wider Lycos-USA Networks- Ticketmaster On-line-CitySearch merger are obviously unknown, but Wired Digital carries a nice collection of eyeballs with it, which the combined company would like to have, including the Wired news sites, HotBot search engine and commerce site, HotWired, WebMonkey and, which have already been integrated into the Lycos network, even though the deal has not been closed. Any reduction in the Lycos network of sites would no doubt make shareholders, such as the main one, CMG Information Services Inc even more nervous than they are already about becoming part of Barry Diller’s USA-Ticketmaster-Home Shopping Channel empire. Lycos closed up $3.75, or 3.9% at $87.50, as technology stocks finally began to recover from their recent pounding.

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