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Lycos Europe eyes IPO?
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December 9, 1999: 7:05 a.m. ET
Lycos, Bertelsmann said to be planning $4B float of European Web venture
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LONDON (CNNfn) - Lycos and Bertelsmann, eager to tap Europe's growing appetite for Web investments, are gearing up to take their European Internet joint venture public as early as February, the Financial Times reported Thursday. The flotation could value the search engine group at $4 billion.
The initial public offering of Lycos Europe - a venture owned 50 percent by U.S.-based Lycos Inc., 25 percent by privately held media group Bertelsmann, and 25 percent by Lycos Europe's chief executive - will be the largest to date on Frankfurt's booming Neuer Markt, the newspaper reported.
The flotation will see between 15 and 20 percent of the company offered to the public, the FT said.
Lycos Europe's IPO ambitions come hard on the heels of a wave of blockbuster Web flotations in Europe, including those of Freeserve in the U.K. and Terra Networks in Spain. Both IPOs achieved enormous early success, reflecting investors' optimism that the Web craze that took the United States by storm a couple of years back is finally taking hold in Europe.
Terra Networks, the Internet unit of Spain's dominant phone carrier, Telefonica, rocketed 185 percent on its first day on the market. Freeserve, the British portal launched by electronics retailer Dixons, rallied as much as 43 percent on its debut as investors scrambled for a piece of the pioneering ISP.
Lycos itself has not directly pumped money into the European Internet venture with Bertelsmann, opting instead to provide technological and marketing support, according to the FT. But the newspaper noted that analysts rank the search engine among the top three Web groups in Europe, along with America Online (AOL) and Yahoo! (YHOO).
Goldman Sachs and Deutsche Bank are reportedly acting as the principal underwriters for the float, and a roadshow for investors is slated for January.
The newspaper said the flotation will allow Lycos Inc. to consolidate its European subsidiary on its balance sheet - something it doesn't currently do for its overseas operations.
Lycos is seeking to emulate in Europe its success in the U.S. Web market, where the group attracts about 30 million visitors a month to its Web search engine, chat rooms, e-mail, news pages and home pages.
About 75 percent of Lycos's $135.5 million in sales come from advertising, with the remainder of revenues generated through e-commerce and licensing agreements with Bertelsmann. 
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