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Lycos IPO at top of range
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March 21, 2000: 8:40 a.m. ET
Net portal's European unit heavily oversubscribed, valued at $5.6B
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LONDON (CNNfn) - Lycos Europe Tuesday priced its initial public offering at the top of the previously indicated range as a surge of demand for its shares belied recent indications that European investors had fallen out of love with Internet IPOs.
Lycos Europe sold shares to the public at  24 each, raising 773 million ($743 million) for the company. The sale of 32.4 million new shares represented 13.9 percent of the Internet portal's capital, valuing the whole concern at 5.6 billion. The issue was 33 times oversubscribed.
The indicated price range for the IPO was between 19 and 24 per share. The stock will start trading Wednesday on the Frankfurt Stock Exchange and the Neuer Markt growth stock market. The shares were sold to retail investors in Germany and investment institutions across Europe.
The strong demand for the issue came despite receding interest in recent Internet IPOs, which dragged several Web-related shares below their offer price after flotations last week.
"This is a key Net IPO," commented Ben Rogoff, a technology fund manager at Aberdeen Asset Management. He praised the company, saying it was of higher quality than some Net operators that staged IPOs in recent weeks. "This is not a one-trick pony."
Europe's highest-profile Net flotations came crashing back to earth Tuesday, indicating how the tide has turned against the high-flying technology sector in Europe.
Web IPOs crash to earth
Online travel and entertainment broker lastminute.com (LMC) hit the London Stock Exchange in a blaze of publicity last week, raising £125 million ($200 million) and surging 40 percent on its first day to value the company at £800 million.
However, by midday Tuesday the shares were at 340 pence, down 11 percent on the session, and below their 380 pence offer price. The loss-making company, with tiny revenues, has come to embody the concerns of European investors at the uncertain business prospects behind soaring stock market values of many dot.com stocks.
A similar example is World Online, the Netherlands-based Internet access provider that floated last Friday. World Online was Europe's biggest Internet initial public offering to date, valued at $2.8 billion. After an initial burst of enthusiasm the shares closed the session up a meager 4 percent on their 43 IPO price.
Since then the stock has struggled to remain in positive territory, and Tuesday it was trading at 32.70, down 13 percent on the day, in Amsterdam.
Hefty declines in the technology-rich U.S. Nasdaq composite index have had a hand in depressing dot.com valuations in Europe, along with investors' concerns that valuations have shot up to unjustified levels.
"Many stocks have lost momentum," admitted Rogoff, but he pointed out that U.K. Internet successes such as access provider Freeserve (FRE) and personal finance website Exchange Holdings () both fell to their offer prices last year, before rallying to several times their initial prices. "This [latest correction] is merely fairly healthy profit taking," he added.
After the flotation, U.S. parent Lycos (LCOS: Research, Estimates) will own 43.9 percent of Lycos Europe, and German media giant Bertelsmann will have 26.9 percent. The European unit's management collectively holds the next-largest slice of shares in Lycos Europe. None of the existing shareholders sold stock in the IPO.
Lycos Europe intends to use the cash raised to develop its strategy of creating a pan-European portal, including potential acquisitions and joint ventures.
Lycos Europe claimed to have three of the ten most visited sites in Germany for January, and two of the 25 most popular sites in Europe. Other brands belonging to the company include Comundo, Fireball and Tripod. 
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