Excite sued for spurning buyout
Two separate lawsuits are filed against the search firm regarding its rejection of an unsolicited offer by Zapata.
The suits, disclosed in a regulatory filing, were filed late last month in Superior Court in San Mateo, California. Both suits, one from Lazar Blisko and the other from Taam Associates, were "styled" as class-action complaints, the filing stated.
They mark another twist in a story that has drawn much attention as one of the first unsolicited bids for a search-engine giant. Most of these companies still are unprofitable, but their stock prices have soared this year on Internet bullishness. Zapata owns food packaging and fish-oil processing businesses, but it wants to capitalize on the booming Net market.
"The complaints seek an order requiring [Excite] to 'carry out their fiduciary duties' to the plaintiffs by announcing their intention to cooperate with 'any entity or person, including Zapata, having a bona fide interest in proposing any transaction that would maximize shareholder value, including, but not limited to, a buyout or takeover of the company," the 8-K filing with the Securities and Exchange Commission said.
The claims also sought to require Excite to undertake an "appropriate evaluation of Excite's worth as a merger or acquisition candidate, take all appropriate steps to enhance the company's value an attractiveness as a merger/acquisition candidate (in the Taam complaint only)...[and] act independently so that the interests of the company's public shareholders will be protected."
In a separate development, a knowledgeable source denied published reports that Walt Disney Company may buy a minority stake in Excite. As reported, Disney recently announced a buyout of the stock that it didn't already own in Starwave. The media giant has alluded to plans to build a Net portal, but it has not offered any details.
Excite said it now is evaluating the complaints and believes that they are "without merit." But the filing warns: "These actions have not yet entered the discovery stage and it is not yet possible to access their ultimate outcome."
A spokeswoman at the search firm had no comment on the lawsuits beyond the comments in the regulatory filing.
In the 8-K document, Excite explained its rationale for rejecting the bid. It said the so-called premium being offered was "illusory," and it cited the "lack of a strategic fit." The unsolicited bid, which occurred on May 21, was "formally" rejected on May 27, the filing added. The company said it consulted with "financial advisers" in making its decision but did not identify them.