Originally created 01/20/99

At Home Corp. to buy Excite



NEW YORK -- High-speed Internet provider At Home Corp. is buying Excite Inc., one of the leading destinations on the World Wide Web, for about $6.7 billion in stock in one of the largest Internet company deals ever.

The deal announced today would surpass America Online Inc.'s $4.2 billion acquisition of Netscape Communications Corp. last year.

Based on closing stock prices Friday, Excite is worth about $3.4 billion, which would mean that At Home would be paying a huge premium.

The deal could eventually give telecommunications giant AT&T Corp. control of one of the highly sought-after portals that serve as entry points onto the Internet.

At Home is owned by Tele-Communications Inc., Cox Communications and several other investors. TCI is in the process of merging with AT&T Corp. in a $39 billion deal that is expected to be completed by spring.

AT&T Corp. chief executive Michael Armstrong has stated he wants to use At Home as a conduit for delivering a wide range of communications services, including electronic commerce. Control over Excite, which has a search engine and links to several online shopping sites, would certainly enhance that goal.

Excite, which has lagged behind other Web-site companies, such as Yahoo!, has been looking for a larger partner in the rapidly consolidating Internet portal market, especially in wake of the AOL-Netscape deal.

Several other companies had been rumored to be interested in Excite, including Yahoo! Inc. and Microsoft Corp. Negotiations between Yahoo! and Excite broke off this weekend, according to published reports.

Excite, eager to extend its reach and market power, was attracted by an alliance with AT&T and TCI.

Excite's shareholders are expected to own about 30 percent of the combined company, which would be known as At Home Networks. Excite chief executive George Bell would take a position on the new company's executive board, reporting to At Home chief executive Tom Jermoluk.

At Home, which delivers high-speed Internet service over cable TV lines, has more than 330,000 customers. The deal would give it access to Excite's more than 20 million registered users and to the company's content-development capabilities.

Both companies are located in Redwood City, Calif.

At Home, whose stock has risen nearly 300 percent over the past year, has the money to make a deal, Michael Harris, president of Kinetic Strategies Inc. told MSNBC. "With At Home's existing stock valuation (of about $11.7 billion), it's been surprising they haven't done more deals. They've certainly got a huge war chest built up."

Neither company has yet made a profit. In the three months ended Sep. 30, Excite lost $6.8 million on revenue of $44 million, including acquisition and amortization expenses.

In the same period, At Home lost $9.7 million.