Lycos up as CMG looks to unload

Shares of Lycos (LCOS) have risen more than 19 percent during the past two weeks, as the company's largest shareholder looks to sell up to a third of its stake to an investor with a strategic fit.

CMG Information Services is looking to sell up to a third of the 4.6 million shares it holds in Lycos, a search engine company that has expanded its focus to become an online information service.

The venture capital firm, which supplied Lycos with $2 million for its first and only round of funding before it went public, is seeking to have a range of investors--including major media companies--buy that portion of its stake, said Bob Davis, Lycos chief executive. He declined, however, to identify any of the suitors eyeing the shares.

"It is far from certain that they will sell a third," he said.

CMG's pace of seeking liquidity, however, appears to be picking up.

The venture firm held a 59.3 percent stake in Lycos, with 8.2 million shares, in November 1996. Last November, that figure dropped slightly, to a 51.3 percent stake, or 7.2 million shares. Within the past four months, it has fallen even further, to a 31 percent stake, with 4.6 million shares.

Should CMG cut its holdings by a third, it would be left with only a 20.7 percent stake, or 3 million shares.

"This is just a VC divesting of its shares and taking profits," Davis said. "This is no different than Softbank Holdings selling some of its stake in Yahoo."

Last December, Softbank reported to the Securities and Exchange Commission that it had sold 350,000 shares, and retains about a 32.3 percent stake in Yahoo, with 13.9 million shares.

Based on Lycos' closing price of 42-1/8 yesterday, and the premium an investor may pay to acquire the block of stock, CMG likely would raise far more than the $64.2 million that would be paid for the shares on the open market.

CMG officials declined to comment on the sale of their shares.