At Home buys Excite in $6.7bn deal

Shares of At Home and Excite Inc. surged Monday after the companies said they were merging in a stock swap valued at about $6.7bn (£4.08bn), dwarfing AOL's acquisition of Netscape last year.

In early trading, shares of Excite gained 39 1/4 to 106 3/4, or 58 percent. Shares of At Home added 10 1/2 to 112 1/2, or 10 percent. The companies are hoping to accelerate broadband deployment by combining Excite's portal with At Home's Internet and cable distribution. At Home's reaches nearly 60 million homes.

Under the agreement, At Home will issue 1.04 shares of At Home Corporation for each share of Excite, which will become a subsidiary. The deal is expected to close in three months.

Excite CEO George Bell will remain in charge of Excite and report to At Home CEO Tom Jermoluk. Bell will also be on the board of directors. There is virtually no overlap between the two Internet players and the companies said it is likely they will add employees. The merger helps out both companies. Excite, which was struggling to keep up with Yahoo! Inc. in the portal wars, needed to grow traffic. Meanwhile, At Home needed to boost its services. Tele-Communications Inc., which is being acquired by AT&T Corp., is At Home's largest shareholder.

At Home and Excite said in a statement that one of their biggest goals is to provide "always on" capability. "The ubiquitous reach of dial- up access combined with the fast expanding footprint of broadband gives consumers the ability to seamlessly migrate between services at different speeds and devices with a consistent interface," said Jermoluk, in a statement. "Excite and At Home will give consumers access to the information they want, when they want it, whether they are using a PC, TV, or any other communications device."

The At Home-Excite merger also makes AT&T a major player on the Internet. Through its TCI acquisition, AT&T will own a stake in Excite. Now AT&T can combine its WorldNet dial-up access, broadband access and content into one package. "You can count on AT&T WorldNet service, which already has a business relationship with Excite, to champion this new, 'allband' portal, while combining it with AT&T's IP and traditional communications services," said AT&T chief C. Michael Armstrong, in a statement.

The gem in the At Home-Excite merger could be Excite's MatchLogic subsidiary. The merger will combine Excite's 20 million registered users with At Home's 60 million home service footprint. Couple MatchLogic with At Home's recent acquisition of Narrative Communications and the possibility for a direct marketing powerhouse is there.