USA Networks to buy Lycos

In a complex three-way stock swap, Lycos announced today that it will merge with Ticketmaster Online-City search and USA Networks' e-commerce and Internet assets in a deal valued at $22 billion (£13 billion). The new company will be known as USA-Lycos Interactive Networks and have pro forma revenue of $1.5 billion (£0.92 billion).

Under terms of the complex deal, USA Networks (Nasdaq:USAI) will control 61.5 percent of the new company, Lycos (Nasdaq:LCOS) shareholders will hold 30 percent and Ticketmaster (Nasdaq:TMCS) holders will own 8.5 percent, the three companies said in a statement. Precise exchange ratios were not disclosed.

USA Networks Chairman Barry Diller will be chairman of the new company. Robert Davis, president and chief executive of Lycos, will serve the same roles in the merged USA/Lycos. The deal is subject to regulatory approval and a vote by Lycos shareholders. Internet venture fund CMGI Inc. (Nasdaq:CMGI) agreed to vote its 20 percent stake in Lycos in favour of the deal.

The deal offers enormous potential for cross-promotion between television and the Internet. USA/Lycos television networks reach 70 million homes, its Home Shopping and Ticketmaster properties handle more than 1 million telephone transactions and ship more than 200,000 items each day. On the Internet, USA/Lycos will reach about 30 million people, nearly 50 percent of all users, through its network of Web sites.

"This places all the necessary ingredients for electronic information and commerce...into one centrally and aggressively managed enterprise," Diller said in the statement. "There is no excuse now for us not to be a dominant player as the world continues its transition towards interactive systems."