Zapata tries to ride again

The top fish-meal maker on the Internet is at it again. Zapata Corp., a Houston-based company that has seen its stock soar on a synergy-stretching push into Web publishing, has made an unsolicited offer to buy WhoWhere Inc., for $400 million in stock, a company executive told MSNBC. The offer is reminiscent of an unsolicited $1.7 billion offer Zapata made in May to buy Web search and directory company Excite Inc.

In both instances, Zapata's overtures have not been taken seriously.

Excite executives laughed off the offer with quick rejection and bad puns ("It seems a little fishy, but this certainly opens a can of worms for us," one official reportedly said.)

WhoWhere is similarly unimpressed, said Dale Fuller, WhoWhere's CEO.

'This comes out of the blue, it's hilarious.' --Dale Fuller, WhoWhere CEO.

"This comes out of the blue, it's hilarious," Fuller told MSNBC while struggling to contain his laughter.

Fuller said that Zapata's CEO Avie Glazer sent an unsolicited fax on July 23 outlining an offer to buy WhoWhere for $400 million of newly-issued Zapata stock.

Fuller said he responded with an e-mail telling Zapata to contact WhoWhere's business development office if it was serious. Fuller said he has not heard again from Zapata.

But Fuller added that "we kind of think it's not a serious offer."

Reason? Fuller maintained that WhoWhere is worth much more than $400 million. He also questioned the value of newly-issued Zapata stock, noting that the company is not yet a proven player on the Internet.

Zapata continues its ambitious Net plan
For his part, Glazer declined to confirm or deny the offer, or to respond to Fuller's statements. But Glazer added that Zapata is continuing with its ambitious plan to transform its Zap.com Web site into a top Internet company via acquisitions of popular Web sites. So far the company has bought more than two-dozen relatively small Web sites, including struggling Webzine Word, and chat area Bianca's Smut Shack.

Zapata was co-founded by former President George Bush in 1953 as an oil and gas producer. The company later moved into commercial fishing and then shifted into selling fish protein and sausage casing. Zapata was taken over in 1994, after a bitter management fight, by Avie's father, Malcolm I. Glazer, a real-estate and broadcasting tycoon who is now the company's chairman.

The apparent randomness of a food-processor moving into Web publishing has prompted many Internet executives to scoff at Zapata. But investors are applauding, driving the stock up more than 100 percent since the start of the month to a recent trading range near $22.

WhoWhere vs. Infoseek
Fuller said that one reason WhoWhere is worth more than $400 million is that it has nearly as much traffic as Infoseek Corp. WhoWhere and its Angelfire personal home page area was visited by 15.4 percent of home-based surfers in June, compared to the 16 percent which visited Infoseek, according to traffic tracker Media Metrix. That kind of traffic makes WhoWhere the tenth most-visited Web area on the Internet, and Infoseek, a top search and navigation site, number nine.

Meanwhile, Infoseek has a market value of nearly $850 million.

But Infoseek also has larger revenues. Fuller declined to disclose privately-held WhoWhere's sales. But he noted that they are still less than Infoseek's, which totaled $52 million in the 12 months ending June 30.

WhoWhere's revenues come from advertising fees, and fees from licensing its free-e-mail, personal home-page, and Web directory services to other Web sites, including Excite's.

Fuller maintained that sales are doubling every quarter, and that expenses are declining. That means the company could be profitable in "three or four quarters," Fuller said. "We're not quite at Infoseek's levels, but we're getting close," Fuller said.

WhoWhere considering other offers
Fuller added that WhoWhere may do an initial public offering of stock later this year.

Fuller added that other companies have also expressed an interest in buying WhoWhere, but he said that none so far has offered the kind of money that WhoWhere could obtain in an IPO.

'We're not quite at Infoseek's levels, but we're getting close.' --Dale Fuller, WhoWhere CEO.

Fuller said the company has talked to investment banks including Nationsbanc Montgomery Securities, Morgan Stanley, and Goldman Sachs about a possible transaction.

But Abhishek Gami, an Internet analyst at William Blair & Co. in Chicago, said that Zapata's $400 million offer for WhoWhere could represent a fair valuation for the company. Gami said that such a price would be in line with other comparable deals, including Microsoft Corp.'s approximately $400 million purchase of free e-mail service Hotmail, and Lycos Inc.'s $58 million purchase of personal home page area Tripod. Meanwhile, Geocities, a top personal home page area, has filed for an initial public stock offering that could be worth approximately $400 million. Geocities is the sixth-most visited Web site area, with 25.5 percent of home-surfers, according to Media Metrix.

In any event, a transaction at any of these levels would create a huge return for WhoWhere's financial backers, Venrock Associates, a venture capital arm of the Rockefeller family, Vantage Point, a Silicon Valley venture capital firm, and an investment partnership affiliated with Texas billionaire Robert Bass. The backers have invested approximately $12 million in WhoWhere since the company was launched in 1995 by a pair of former graduate students from Stanford University, a WhoWhere spokeswoman said.