Lycos Inc’s shares jumped about 17% yesterday on the news that USA Networks Inc is likely to abandon its bid to buy the internet portal company, following the resistance of some key Lycos shareholders to the deal. The Wall Street Journal reported the likely abandonment, citing people familiar with the deal, but leaving the possibility open that the television network, led by Barry Diller might use it as an opportunity to come in at a later date with another bid. Neither company would comment yesterday. USA Networks has said repeatedly that it will not increase its bid, which was launched in early February. Under the terms of that deal, USA and its Ticketmaster Online-CitySearch would combine its assets with Lycos for a company with a total value of about $18bn. The shareholders of each company would get a proportion of the larger company reflecting the value of the shareholding, plus a premium, in the case of Lycos shareholders who would own about 30% of USA-Lycos.
But that premium was not high enough for many of them, most notably, David Wetherell, chairman of CMG Information Services Inc, Lycos’ largest shareholder. He said at first that CMGI would vote in favor of the deal, but eventually resigned from the Lycos board to find another suitor for the company, which he has so far failed to do. Moreover, the Journal estimates that about 65% of the stock is held by day traders, who are looking for a higher premium that the one on offer and, if they acted in concert could easily block a deal that requires 50% approval. Lycos closed up $15.75, or 17.6% at $105.25, while USA Networks closed down $0.125 at $35.25.
