Shares of Lycos Inc. leapt nearly 18% Monday in response to reports that Barry Diller’s USA Networks may abandon plans to buy the Internet portal.
Since Diller’s initial $22 billion bid for the company was made in February, Lycos’ stock has been hovering well below its 52-week high of $145.38. Monday trading boosted Lycos’ stock 17.6%, or $15.75, to close at $105.25.
Although Diller has yet to reach a final decision about buying Lycos, strong shareholder opposition at Lycos has led USA Networks and Wall Street to conclude takeover plans would fail in a shareholder vote scheduled for July.
A deal has also been hampered by an ongoing dispute between Lycos founder David Wetherall and Diller. Wetherall stepped down from the Lycos board in March to fight the deal through CMGI Holdings, which owns 20% of Lycos’ stock.
Analysts have all but said the deal is dead.
“Now they (Lycos) are back being an independent Internet company,” said analyst Ken Winston of Needham & Co. He said Lycos became even more attractive last month when it surpassed Yahoo! for the first time in number of users.
“It seems that Lycos will be an independent company for at least the next six months and then another deal will come later,” Winston added.
Wall Street, however, believes that USA Networks might modify its offering with an even sweeter deal. If not, it may pursue other Internet deals through its Ticketmaster Online-CitySearch subsidiary.
Diller’s proposal, if implemented, would form USA/Lycos Interactive Networks, which would combine Lycos’ Internet search engine with USA Networks’ Home Shopping Network, its Internet Shopping Network/First Auction units and its Ticketmaster Online/CitySearch unit.
Spokespeople for both companies have declined to comment.