Under today's deal, shareholders of MapQuest will receive 0.32 shares of AOL common stock for each share of MapQuest stock, the companies said in a statement. Based on closing prices yesterday, the AOL deal values MapQuest at a lower level than yesterday's close. Yesterday, MapQuest closed at 32.5, setting an all-time high.
MapQuest shares closed down 7.06 points, or 22 percent, at 25.44 today.
Though investors showed their disapproval of the deal, some analysts thought it was a good move.
"Some people have hoped for a higher price," said Lee Wilder, a financial analyst at J.C. Bradford.
Still, Wilder, who rates the stock a "buy," said the deal is a good long-term move for MapQuest and a "very important strategy alliance that will leverage its capabilities."
Safa Rashtchy, a financial analyst at U.S. Bancorp Piper Jaffray, agreed the AOL buy is a good move for MapQuest.
"MapQuest has tremendous assets in mapping [services] and Web sites with about 4 million visitors, but what they really needed was a major marketing power to monetize these assets," said Rashtchy.
AOL said adding MapQuest to its local content network Digital City and movie listing guide and ticketing service MovieFone offers new advertising and business opportunities built around mapping and directions for areas of entertainment, dining and shopping online.
The acquisition provides AOL members, including members of CompuServe and visitors to Netcenter and ICQ, with maps, directions and new ways to customize their experience, Dulles, Va.-based AOL said.
The acquisition also pushes the company's "AOL Anywhere" strategy by providing maps and directions on multiple devices, such as smart phones, PalmPilots and other non-PC devices. The company has been aggressively building on its strategy partly by forming alliances with satellite companies, mobile telecommunications firms and makers of portable devices. The company also has made significant investments in satellite television firms to try to remain on top of the consumer Net access market.
Earlier this month, AOL announced plans to acquire Tegic Communications, a company specializing in text entry for wireless devices. The deal highlighted AOL's push to move beyond personal computers and to reach users through telephone and other portable devices, as well as through television sets.
Three-year-old MapQuest, which has a strong and growing international presence with coverage of 78 countries in five languages, generates the majority of all Internet mapping page views, delivers mapping services to almost 1,000 Web sites, and is linked to by more than 170,000 sites, the companies said.
The stock transaction is slated to close in the spring of 2000 and is subject to various closing conditions, such as regulatory approvals and the approval of MapQuest shareholders.