Venture firm's credo links @Home, Excite

The answer, at least in the case of the proposed $6.7 billion acquisition of Net portal Excite by @Home Network, is venture capital firm Kleiner Perkins Caufield & Byers (KPCB).

The merger provided an exit strategy for Excite in a highly competitive business, and also happened to be lucrative for KPCB partners, who were on both sides of the deal.

KPCB's stake in both companies lends itself to the firm's Keiretsu philosophy, a strategy of encouraging the stable of companies in which it has invested to work together. Industry observers had speculated that KPCB had played a significant role in bringing the two companies--located only a parking lot away from each other in Redwood City, California--together for a corporate union.

KPCB's revised ownership stake in the soon-to-be-combined company, in addition to the role of a KPCB partner in the talks between the companies, was detailed in a regulatory document filed with the Securities and Exchange Commission as part of the acquisition.

KPCB, an @Home and Excite investor, held 1.6 million shares of @Home stock and 1.4 million shares of Excite prior to the merger. KPCB will see its 1.2 percent stake in @Home reduced to less than 1 percent after the merger, according to the document.

KPCB partners L. John Doerr, a legendary Silicon Valley matchmaker, and William R. Hearst III are members of @Home's board of directors, while Vinod Khosla, also a KPCB partner, sits on Excite's board.

Both Doerr and Hearst are expected to stay on as directors, and @Home is seeking to expand its board by adding Excite chief executive George Bell to the 11-member panel, the company said in the filing. In addition, earlier this year @Home added AT&T chief executive C. Michael Armstrong and John Petrillo, AT&T executive vice president for corporate strategy and business, to its board.

Hammering out a deal
After spending two wintry months weighing ways to grow its business, Excite came to the conclusion that it needed to consider a merger, according to @Home's regulatory filing with the SEC.

But it took only four weeks last winter for Excite to clinch a buyout deal with @Home.

Discussions with @Home kicked off December 19, when Excite's Bell outlined to @Home's chief executive the various joint business opportunities, including the possibility of a sale to @Home.

Bell and Jermoluk, who met at least four times during the courtship, returned to their respective boards January 4 and 5 to discuss a possible merger.

But during these @Home board meetings, former director Jim Barksdale neither attended nor voted due to a potential conflict of interest. Barksdale is the former chief executive of Netscape Communications, which competes with Excite in the portal business.

KPCB first formally entered the talks January 11 when Khosla and Bell met with Jermoluk to discuss "valuation and structural issues relating to a business combination between the companies," according to the regulatory filing.

Despite the talks with @Home, Excite also was holding discussions with other potential players. And, on January 13, the Excite board told Bell to notify each of the leading acquirers to present their "best offer."

Late the next day, Excite and @Home entered into a mutual nonsolicitation agreement and early on the morning of January 19, the boards of Excite and @Home signed the merger agreement.

All in the family
The @Home-Excite deal is hardly the first time KPCB's involvement played a role in business deals between its Internet clients.

Keiretsu struck Monday when online retailer Amazon.com agreed to buy fellow KPCB interest Accept.com.

Amazon also is the largest shareholder in Drugstore.com. Like Amazon and Accept, Drugstore.com is a member of the KPCB Internet investment family.

Of course, Keiretsu does not necessarily mean buyouts or investments.

KPCB points to an Internet-based online banking alliance between Intuit, Netscape, and Concentric Network as an example of Keiretsu in action.

Drugstore.com and Healtheon, also a Kleiner company, have partnered in a deal for online medical prescription refills.

KPCB says it has brokered more than 100 alliances among its network of companies.

News.com's Jeff Pelline contributed to this report.