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Preview Travel plans buyout

The company signs a letter of intent to acquire a privately held firm that operates Net vacation site

Net travel firm Preview Travel today said it has signed a nonbinding letter of intent to acquire Adventure Media, a privately held company that operates Net vacation site

Under the terms of the letter, Preview Travel plans to exchange roughly $5 million in its stock--200,000 shares--for all of Adventure Media's outstanding stock.

The deal is another example of an Internet company using its highly valued stock as currency for an acquisition. Preview Travel has seen its stock skyrocket nearly 220 percent this year, reaching a 52-week high of 38.125 in April. The company's stock jumped nearly 20 percent last month when PaineWebber gave it a "buy" recommendation.

Other firms also have jumped on Wall Street's love affair with Internet companies as an opportunity to buy smaller firms with their highly valued stock. Portal company Lycos, for example, bought directory technology firm WiseWire in April for $39.75 million in stock, and acquired Net community Tripod in February for $58 million in stock.

Adventure Media, which operates travel site, specializes in cruise, resort, and active vacations. Among the Boston-based firm's assets is an online database of active vacations such as golf camps, Himalayan treks, and African safaris, which will expand Preview Travel's vacation offerings.

"We're aggressively looking into expanding into the vacation market," said Ron Pernick, director of communications for Preview Travel. "We're very impressed with what [Adventure Media] has to offer."

Pernick noted that so-called nonair services--such as hotel and car reservations, vacation packages, and cruises--have become a greater source of revenue over the past year. For the first quarter of 1997, nonair represented only 4 percent of revenue for Preview Travel, while air made up 80 percent. In the first quarter of 1998, the nonair number jumped to 21 percent, with air making up 67 percent of revenues.

The proposed deal with Adventure Media "gets us a lot of packages and content very quickly," he said.

Analysts have noted that online travel represents one of the largest consumer e-commerce markets. Last month, Preview Travel said it surpassed the 4 million subscriber mark, up from 1.5 million registered subscribers over the past year. The firm said it is generating 12,000 transactions per week, with average gross bookings of more than $4 million per week.

In a recent Weekly Web Report, BancAmerica Robertson Stephens analyst Keith Benjamin wrote: "We find Preview Travel's stock is particularly attractive when we consider its market capitalization of about $425 million, relative to the substantial market opportunity for Web travel, in our view."

The acquisition is subject to the execution of a definitive agreement as well as approval by both firms' boards and by Adventure Media's stockholders, the firms said.