The Internet industry rumor mill was spinning wildly Tuesday with reports that Yahoo! (Nasdaq:YHOO) has been in discussions with Excite@Home (Nasdaq: ATHM) that could culminate in at least a $17 billion (US$) takeover of the newly-merged company by Yahoo!.
A number of online news sources cited a Business Week Online report that said that the two companies have been talking for six weeks, but are still at a preliminary stage and need to do much more if the blockbuster deal is going to get done.
The report — which cited two sources said to be close to both companies — said that the deal could be for more than the current $17 billion market value of Excite@Home.
A Yahoo! spokesman said Tuesday that the company does not comment on rumors or speculation. Excite@Home was unavailable for comment.
The report said Yahoo was keen to acquire the Excite portal and its user base of 38 million, but was less interested in the broadband network operated by @Home. @Home recently paid $6.7 billion for Excite in a stock deal that’s been valued as one of the largest Internet mergers to date.
Effect on Recent Merger?
There was immediate speculation that, if the deal went through, Excite@Home would undo its merger. Excite would then go to Yahoo! and @Home would become part of a joint venture between Yahoo! and AT&T, which already owns part of the company.
Others say that Yahoo! would benefit from @Home’s broadband network, allowing it to deliver more media-rich services over the Internet.
However, that’s just speculation, and with both companies saying they don’t comment on rumors, time will tell whether Yahoo! is ready to take such a giant leap.
The two companies have suprisingly similar ledger books. Excite@Home reported second quarter revenues of $100 million (US$), while Yahoo! reported second quarter revenues of $115 million.
Excite@Home lost $17 million last quarter, while Yahoo! posted a net loss of $15 million.