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Wednesday, May 12, 1999 Published at 12:36 GMT 13:36 UK

Business: The Company File

Lycos takeover collapses

The US groups have had a networking problem

The future of Lycos, the Internet search engine and portal site, has been thrown into doubt after a takeover deal with television and home shopping group USA Networks collapsed.

The deal was originally valued at around $20bn when it was announced in February.

The merger of the two companies was supposed to create an e-commerce powerhouse, but many Lycos shareholders were unhappy with the price USA Networks was willing to pay.

Media mogul Barry Diller, who runs USA Networks, is understood to have pulled the plug on the takeover after realising he could not win a Lycos shareholder vote.

No sale

The deal would have brought together Lycos, USA Networks' Home Shopping television Network and Ticketmaster Online-Citysearch, a ticketing and online entertainment agency.

The companies announced that they had called off the deal by mutual consent.

Shares in Lycos rose sharply on Tuesday as rumours began to spread that the deal with USA Networks was doomed. Analysts now believe Lycos could be a takeover target for another media group.

Under the termination agreement, Lycos will pay USA Networks $35m if it agrees to be acquired by someone else before July 15.

Separately, the companies said they had reached an agreement under which Ticketmaster and CitySearch services will be featured on Lycos websites.

USA Networks' offer failed to win the support of Lycos' largest shareholder, CMG Information Services, a Boston-based investment firm that owns about 20% of the Internet company.

Lycos shareholders were unhappy at plans to dilute the group's pure Internet business with the older and slower growing businesses USA Networks have to offer.

Mr Diller is now expected to seek another Internet deal.

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