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AOL eyes instant message firm

America Online is expected to buy Israeli Internet software company Mirabilis, developer of the popular messaging software ICQ.

America Online is expected to buy Israeli Internet software company Mirabilis for $300 million in cash and stock, according to a published report.

In exchange for agreeing to stay with the company for at least an additional four years, the four twenty-something founders of Mirabilis will receive another $80 million over the four-year period, said the report, by Israeli business publication Globes.

Mirabilis is the developer of popular messaging software ICQ, which allows users to communicate with each other while logged onto the Internet.

The software is similar to--and a competitor of--AOL's Instant Messaging service, which has gained popularity among both proprietary service members and external Internet users with its "buddy list" feature. The service informs users if someone on their "buddy list" is online and then lets them communicate directly with their designated "buddies."

ICQ has similar parameters. ICQ and AOL are considered the top competitors in this increasingly popular field.

Neither AOL nor Mirabilis would comment on the report.

Analysts have said AOL stands to benefit from the acquisition, especially with the sheer number of ICQ users, to strengthen its community. In a January analyst and investor meeting, AOL stressed the importance of further developing its instant messaging service, said Andrea Williams, an analyst at Volpe Brown Whelan.

But most importantly, acquiring an additional 11.4 million users could lead to more advertising revenue and a stronger marketing base, said Patrick Keane of Jupiter Communiscations.

"It's an extra 11 million people to send ads to," he said. "There's a lot of value to owning those people."

ICQ, which has been available for 18 months, now boasts 11.4 million registrations and adds 57,000 new users every day, according to Mirabilis. By comparison, AOL said its buddy list network now has more than 20 million users, encompassing both subscribers and users from software downloads outside the network. AOL also said there are 225 million instant messages sent each day.