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AOL-Netscape deal approved by DOJ

America Online wins antitrust clearance to complete its acquisition of Netscape Communications.

    The Justice Department has approved America Online's proposed acquisition of Netscape Communications, as well as the strategic alliance between AOL and Sun Microsystems, a spokeswoman at the federal agency said today.

    "After a thorough investigation and analysis, the department's antitrust division has closed its investigation of America Online's proposed acquisition of Netscape Communications, and America Online's strategic alliance with Sun Microsystems," the Justice Department's antitrust division said in a statement.

    "The division has decided that it will not challenge the transactions, having concluded that neither the merger nor the alliance violate the antitrust laws," the statement continued.

    The AOL-Netscape transaction, valued at $4.3 billion when it was announced November 24, now is worth $8.98 billion as AOL's share price more than doubled and its stock split two-for-one last month.

    The federal review of AOL's proposed buyout of Netscape had been extended for nearly two weeks without explanation. AOL had previously said in a prospectus filed with the Securities and Exchange Commission that it expected the "applicable waiting periods" from the Justice Department for reviewing the deal to expire on February 28.

    Although the regulatory agency has approved the deal, Netscape shareholders still need to do so. A vote is scheduled for March 17. In the prospectus filed last month, Netscape's board of directors asked shareholders to accept the merger.

    "Of course we are pleased with the [DOJ's] decision and look forward to the Netscape shareholders' meeting on March 17," said an AOL spokesman.

    The Hart-Scott Rodino Act of 1976 requires an initial waiting period during which parties cannot complete their transaction. At the end of this period, the regulatory agency may ask for additional documentation or further information before approving or striking down a merger.

    Analysts are awaiting the close of the deal, one of the largest Internet mergers to date. AOL's challenges including melding its workforce with Netscape's, as well as integrating products and technologies.

    Netscape cofounder Marc Andreessen will become AOL's chief technology officer when the deal closes. Netscape chief executive James Barksdale will join AOL's board of directors.