TERRA LYCOS EXCHANGE RATIO FIXED AT 2.15 WITH OCTOBER CLOSING;
VALUES LYCOS SHARES AT $65 AS OF OCTOBER 16, 2000
WALTHAM, Mass.- October 17, 2000 -Lycos, Inc. (NASDAQ: LCOS), the
Internet's leading multi-brand network, today announced that the exchange
ratio for its upcoming merger with Terra Networks (NASDAQ: TRRA) has been
set at 2.15 with the expected closing this month. Lycos shareholders will
receive 2.15 Terra shares for every Lycos share currently owned, upon the
closing of the merger later this month. Shareholders will have the option
of choosing either a Terra ordinary share or a Terra ADS (American
Depository Share). The implied value of a Lycos share, based on the October
16, 2000 Terra ordinary share closing price, would be $65.
"The exchange ratio offers Lycos shareholders a substantial premium," said
Bob Davis, president and CEO of Lycos, Inc. "But of equal importance, is
the global powerhouse we are creating with Terra Lycos. We have a history
of success in creating shareholder value at Lycos and we expect our new
company to continue that tradition."
The merger of Terra and Lycos is expected to be complete this month,
creating Terra Lycos with operations in 40 countries around the world and
approximately $3 billion in cash. The new company will be one of the most
well capitalized Internet companies in the world and will build on its core
themes of globalization, convergence and profitability.
Yesterday, Telefonica, Terra's main shareholder, reaffirmed its commitment
to the merger, which they said, "will create one of the leading Internet
companies in the world." In September, Terra Networks raised $1.9 billion
in a rights offering, nearly all of which was from Telefonica.
Telefonica also said, "The merger with Lycos will create a company
positioned to play the convergence of telecommunications, media and
Internet, because of its strong partnerships with Bertelsmann, Sumitomo,
Singapore Telecom and Bell Canada, among others, the scope of its
multinational sales force and its broad international footprint." They
added, "Terra's joint-venture with Telefonica Moviles, Terra-Mobile, will
also play a key role in the strategic area of wireless Internet."
The final step prior to the closing of the Terra Lycos merger is the
Special Meeting for Lycos stockholders, which will be held on October 27,
2000, at which Lycos shareholders have the opportunity to vote on the
proposed merger. The proxy statement was mailed to Lycos shareholders on
September 28. Lycos recently announced that its largest shareholder, CMGI,
Inc. voted all of its shares in favor of the merger.
Lycos and Terra have received all regulatory approvals required to date to
move forward with the merger. On September 22, the Securities and Exchange
Commission declared the registration statement for the merger effective.
Equivalent procedures are moving forward with the CNMV in Spain. Lycos and
Terra have also received all antitrust clearances required prior to the
merger.
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About Lycos, Inc.
Founded in 1995, Lycos, Inc. is a leading Web media company and owner of
the Lycos Network, one of the most visited hubs on the Internet reaching
nearly one out of every two U.S. Web users. The Lycos Network is a unified
set of Web sites, attracting a diverse audience by offering a variety of
services, including leading Web search and navigation resources; Web
community and communications services including free homepage building,
free Web-based e-mail, clubs, chat, instant messaging; a personalized My
Lycos start page; a comprehensive shopping center featuring more than 3,100
merchants; and an assortment of compelling content such as games, music,
news, fun and educational information and activities for kids as well as
information about investing, technology, entertainment, sports, small
business, travel and more. The Lycos Network is composed of Lycos.com,
Tripod, Who Where, Angelfire, MailCity, HotBot, HotWired, Wired News,
Webmonkey, Sonique, Quote, Gainesville, Lycos Zone and Matchmaker.
Headquartered near Boston in Waltham, Mass., Lycos, Inc. is a global
Internet leader with a major presence throughout the U.S., Europe, Asia,
Canada and Latin America.
On May 16, Lycos, Inc. entered into a definitive agreement with Terra
Networks, S.A. (MC: TRR; NASDAQ: TRRA), a global Internet company and the
leading provider of Internet access and interactive content and services to
the Spanish- and Portuguese-speaking world, under which Terra will acquire
Lycos in a stock-for-stock transaction. Upon completion of the transaction,
Lycos shareholders will own approximately 41.6% to 49.9% of the new
company, Terra Lycos. The formation of Terra Lycos is subject to
shareholder and regulatory approval.
Forward Looking Statements
This release contains forward-looking statements within the meaning of the
"Safe Harbor" provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations or
beliefs and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. The forward-looking statements in this release
address the following subjects: expected date of closing the merger; future
financial and operating results; and timing and benefits of the merger.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: the risk
that Terra's and Lycos's businesses will not be integrated successfully;
costs related to the merger; failure of the Terra or Lycos stockholders to
approve the merger; inability to obtain, or meet conditions imposed for,
antitrust approvals related to the merger; inability to further identify,
develop and achieve commercial success for new products, services and
technologies; increased competition and its effects on pricing, spending,
third-party relationships and revenues; inability to establish and maintain
relationships with commerce, advertising, marketing, technology and content
providers.
For a detailed discussion on these and other cautionary statements, please
refer to the proxy statement/prospectus which Terra and Lycos have filed
with the Securities and Exchange Commission, and to Terra's filings with
the Securities and Exchange Commission, including the Risk Factors section
of Terra's F-1 filing that became effective in November 1999, and Lycos's
filings with the Securities and Exchange Commission, including the section
titled "Factors Affecting the Company's Business, Operating Results and
Financial Conditions" of the Management's Discussion and Analysis in its
Form 10-K for the year ended July 31, 1999 and the Risk Factors section of
Lycos's S-3 filing that became effective in March, 2000.
The proxy statement/prospectus was mailed to Lycos stockholders in order to
seek their approval of the merger on or about September 28, 2000. We urge
investors to read the proxy statement/prospectus and any other relevant
documents that Terra Networks and Lycos have filed and will file with the
SEC because they contain important information.
Investors and securityholders may obtain a free copy of the proxy
statement/prospectus and other documents tiled by Lycos and Terra with the
SEC at the SEC's web site at www.sec.gov. The proxy statement/prospectus
and these other documents may also be obtained for free from Lycos or
Terra. Please read the proxy statement/prospectus carefully before making a
decision regarding the share exchange.
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2000 Lycos, Inc. - Lycos is a registered trademark of Carnegie Mellon
University. All other product or service marks mentioned herein are those
of Lycos or their respective owners. All rights reserved.
