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Lycos, USA Networks will file proxy

Lycos will file a proxy statement with the SEC about its merger with USA Networks within a week, a senior Lycos executive says.

    NEW YORK--Lycos will file a proxy statement with the Securities and Exchange Commission about its merger with USA Networks within a week, a senior Lycos executive said today.

    Lycos vice president of finance Thomas Guilfoile added that he did not expect the proxy to differ in any way from the original merger deal signed with USA Networks last month.

    "Nice to see quite a crowd," said Guilfoile as he began speaking at PaineWebber's Mass Market Internet Conference. "Hopefully it reflects the enthusiasm for the company, not the controversy surrounding" the USA Networks-Lycos deal.

    But the overflowing crowd of investors and fund managers was mostly interested in the status of the deal.

    He declined to comment, however, on why CMGI, the company's largest shareholder, has had a change of heart and is seeking to scuttle the USA-Lycos deal. He said Lycos could not elaborate until it had filed the proxy with U.S. regulators.

    "I can't speak for them," Guilfoile said.

    Yesterday, CMGI managing director Peter Mills told investors at the PaineWebber conference that other parties were interested in Lycos. He declined to identify the potential bidders.

    Since the deal was announced last month, Lycos has seen its shares lose more than a third of their value as investors made it clear they felt they had not received a strong premium in the deal. After CMGI, which controls 18.5 percent of the company's stock, pulled its support of the merger, the stock has steadily climbed, apparently on hope that the deal will not go through.

    Last week, CMGI chairman David Wetherell resigned from the Lycos board to try to woo other potential suitors for Lycos or to press for a renegotiation of the original deal. Lycos stock has continued to climb steadily but closed down just under a quarter percent today at 105.5. CMGI stock tumbled 6.16 percent to close at 180.75. USA Networks slipped 1.15 percent to close at 37.56.

    "The transaction has not been well understood," said Guilfoile. "Certainly we are trying to make sure that people understand it."

    He stressed that the company is poised to grab a commanding share of the blossoming e-commerce market because many of USA Networks' properties are already geared for taking orders and shipping products. He noted that the Home Shopping Network already had about $500 million pumped into building its infrastructure, making it ready for prime-time e-commerce transactions.

    Earlier this month, USA Networks' Barry Diller said his company would not renegotiate the terms of its Lycos acquisition. The portal has been slapped by one shareholder lawsuit after another alleging that Lycos executives made misleading statements about the company's strategic future, including intentions to stay independent.

    During his presentation to investors, Guilfoile noted that after the completion of the acquisition, USA Networks will control 61.5 percent of the new company, with Lycos holding about 30 percent and public shareholders controlling only 8.5 percent.