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AOL gets chattier
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June 8, 1998: 9:48 a.m. ET
Internet leader pays $287M for chat technology of Israeli-based Mirabilis
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NEW YORK (CNNfn) - America Online said Monday it had acquired Mirabilis Inc., an Israeli-based company that guards the gateway to one of the Web's most popular chat rooms, for $287 million in cash.
Mirabilis, based in Tel Aviv, has used its ICQ (named to sound like its purpose, "I seek you") instant communications technology to build an Internet community of 12 million users able to swap real-time messages in a sort of on-line kaffeeklatsch.
AOL's own chat technology, called Buddy Lists, allows 30 million registered subscribers worldwide to store the names of colleagues, friends or relatives in memory. Whenever any one of them is online, a box pops up on the screen alerting a user to their presence. The user may then send an instant message to the person.
The ICQ technology is more sophisticated, creating virtual communities in cyberspace. The software also allows users to play games, exchange files and swap URL's, the address links that allow Internet surfers to access Web sites.
Under the terms of the acquisition, starting in 2001 AOL will make contingent payments of up to $120 million over three years based on performance levels. AOL said it does not expect the purchase to have any negative effect on operating earnings.
Mirabilis will continue to be based in Tel Aviv, but its managers will now report to Ted Leonsis, the president of AOL Studios.
AOL is hoping the acquisition of Mirabilis will spur its international outreach, especially in Europe, where AOL has teamed up with Bertelsmann AG in a joint venture that has become the leading provider of online Internet services in Europe.
About 60 percent of ICQ's subscribers are based outside the United States, of which 40 percent are European.
America Online, based in Dulles, Va., is the world's leading provider of interactive services and content and runs AOL.com, the most popular from-home Web service. AOL Interactive Services boasts 12 million subscribers. CompuServe, which AOL recently acquired, offers an additional 2 million network users.
Shares of AOL closed at 83-1/4 Friday.
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