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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MAY 21, 1998
EXCITE, INC.
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(Exact name of Registrant as specified in its charter)
CALIFORNIA
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(State or other jurisdiction of incorporation)
0-28064 77-0378215
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(Commission (IRS Employer
File Number) Identification No.)
555 Broadway, Redwood City, CA 94063
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(Address of principal executive offices) (Zip Code)
(650) 568-6000
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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ITEM 5: OTHER EVENTS.
On May 21, 1998, Excite, Inc. (the "Company" or "Excite") announced that
it had received and rejected an unsolicited letter proposing that Excite
negotiate to merge with Zapata Corporation ("Zapata"), a Texas-based company
which, according to its most recent reports filed with the Securities and
Exchange Commission, holds approximately 40% of the outstanding common stock of
Envirodyne Industries, Inc., a company primarily engaged in the business of
selling food packaging products, and approximately 60% of the outstanding common
stock of Omega Protein Corporation, which markets a variety of products produced
from menhaden fish, including regular grade and specialty fish meals and crude
and refined fish solubles. Zapata has also announced that it intends to make
acquisitions in businesses which offer services in the Internet and e-commerce
market, and that it had acquired two Web sites named "Word" and "Charged."
The merger proposed by Zapata was to be a "stock-for-stock merger
transaction in which Zapata acquires Excite." Zapata also proposed that "each
outstanding share of Excite Common Stock would be exchanged for $72 of newly
issued Zapata common stock." On May 21, 1998, the closing price of Excite's
Common Stock was $61 per share, and Excite had a market capitalization of
approximately $1.4 billion. Excite's Common Stock had a closing price as high as
$91.125 per share as recently as April 16, 1998. On May 21, 1998, the closing
price of Zapata's common stock was $10.50 per share, and Zapata had a market
capitalization, based on shares of common stock outstanding as of May 15,
1998 as reported in Zapata's most recent Quarter Report on Form 10-Q, of
approximately $244 million.
After consultation with its financial advisors, the Company determined
that the proposed "premium" was potentially illusory, because, among other
things, (i) the transaction was to be structured as a stock-for-stock
transaction in which, because of the large disparity in the two companies'
market capitalizations, Excite's shareholders would own a substantial majority
of the capital stock of the combined company and (ii) the lack of strategic fit
between the businesses of Zapata and Excite would likely result in a market
capitalization of the combined company not appreciably higher than the sum of
the market capitalizations of the separate companies. Because of, among other
things, this potentially illusory nature of the proposed premium, in addition
to the potential dilution of ownership interest to Excite's shareholders that
would result from the transaction, the Company determined that Zapata's merger
proposal was not feasible. On May 27, 1998, the Board of Directors of the
Company formally ratified the determination not to pursue this merger proposal.
On May 21, 1998, two lawsuits were filed in the Superior Court of the
State of California - County of San Mateo. The first (Case No. 404918), styled
as a class action complaint for alleged breach of fiduciary duties, was filed by
Lazar Blisko ("Blisko") against Excite, its directors and one former director.
The second (Case No. 404921), also styled as a class action complaint for
alleged breach of fiduciary duties, was filed by Taam Associates, Inc. ("Taam
Associates") against Excite and its directors.
Blisko and Taam Associates have alleged in their respective complaints,
among other things, that the respective defendants breached their fiduciary
duties to the Company's shareholders by rejecting Zapata's offer. The complaints
seek an order requiring the defendants to "carry out their fiduciary duties" to
the respective plaintiffs and class members by announcing their intention to (1)
cooperate with "any entity or person, including Zapata, having a bona fide
interest in proposing any transaction which would maximize shareholder value,
including, but not limited to, a buy-out or takeover of the Company," (2)
undertake an "appropriate evaluation of Excite's worth as a merger or
acquisition candidate," (3) "take all appropriate steps to enhance the Company's
value and attractiveness as a merger/acquisition candidate" (in the Taam
Associates complaint only), (d) take all appropriate steps to "effectively
expose the Company to the marketplace in an effort to create an
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active auction of the Company," (e) "act independently so that the interests of
the Company's public shareholders will be protected," and (f) "adequately ensure
that no conflicts of interest exist between the defendants' own interest and
their fiduciary obligation to maximize shareholder value or, in the event such
conflicts exist, to ensure that all conflicts of interest are resolved in the
best interests of the public shareholders of the Company." Each complaint also
seeks declaratory and injunctive relief, unspecified damages, and costs and
attorneys' fees.
The Company is currently in the process of evaluating each of the
complaints and believes that the causes of action alleged in the complaints are
without merit. The Company intends to defend each action vigorously. However,
these actions have not yet entered the discovery stage and it is not yet
possible to assess their ultimate outcome. An adverse outcome to either
litigation could have a material adverse effect on the Company's business,
results of operations and financial condition. Even if the Company is
successful in defending these actions, there can be no assurance that the costs
and the diversion of resources required to defend the actions will not have a
material adverse effect on the Company's business, results of operations and
financial condition.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXCITE, INC.
Date: June 1, 1998 By: /s/ Robert C. Hood
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Robert C. Hood
Executive Vice President, Chief Administrative
Officer and Chief Financial Officer
