SEOUL - Daum
Communications Corp, South Korea's largest Internet
portal, said Monday it had acquired Lycos Inc from
Spain's Terra Networks for 111.1 billion won (US$95.2
million).
The acquisition of Lycos, which Daum
claims is the seventh-most visited website in the United
States, will give the Korean Internet portal a gateway
to the American Internet search market, company
officials said.
The agreement, signed on July 31
between Daum chief executive Lee Jae-woong and Terra
Networks executive chairman Joaquin Faura, calls for
Daum to take over a 100% stake in Lycos, which is listed
on the US Nasdaq stock market.
"I think it's the
right time for Korean Internet companies to make inroads
overseas," Lee said in a conference call with analysts.
"In South Korea, high growth in the domestic
Internet market may continue over the next three years,
but the question is whether the growth will persist over
the next 10 to 20 years," he said.
The
acquisition is expected to significantly enhance Daum's
Internet services presence in the US, Lee added.
With the deal, Daum will selectively combine
Lycos' brand recognition with the Korean company's key
Internet business capabilities necessary to capitalize
on the solid growth opportunities in the region, the
chief executive said.
In particular, Lee said he
will launch a web-based community service in the US by
adding Lycos' search engine.
In 2000, when the
Internet boom reached its peak, Lycos was acquired by
Terra for for $12.5 billion. Since April this year,
Terra has sought to sell the Internet unit after
suffering mounting losses.
Some analysts,
however, raised doubts about the deal, citing little
synergy effects given a lack of profitable business
models in Lycos.
"Doubts surfaced over the
finances for the acquisition because Daum appeared to
put up more money to make Lycos competitive in the US
market," said Kim Chang-kwon, an Internet analyst at
Kyobo Securities Co, a local brokerage.
There is
widespread concern over Daum's financial backing to
normalize operations at Lycos, which has been buffeted
by heavy losses since 1999, the analyst said.
"The deal has a negative effect on Daum because
it is meaningless to acquire Lycos, which has no killer
content," another local brokerage, LG Investment &
Securities Co, said in a research note.
(Asia
Pulse/Yonhap)
Aug 3, 2004
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