Lycos Europe To Shut Down After Failing To Find Buyer

It’s the end of the road. After putting itself on the auction block in April, Lycos Europe has finally conceded what had become increasingly clear - no-one wants to buy the ailing portal. So it confirmed Wednesday morning it will wind up its portal and its web hosting activities. It’s now about asset stripping - the company said it still wants to sell its domain names, its Danish business and its shopping sites. As a result, Lycos Europe will give back €50 million to its shareholders, but about 500 of 700 staff will reportedly lose their jobs. All subject to a December 12 shareholders meeting. As the Web 2.0 fraternity might say, “epic fail”. Release.
A JV between Telefonica’s Terra internet arm (which owns 32 percent), and Bertelsmann (which is thought to own 20 percent), Lycos Europe has always been a separate company to America’s Lycos Inc, but both sites have suffered since they were the web’s most-visited back in the portal hey-days of 1999. The US company has changed hands twice since then and the European venture has failed to capitalise on the online ads boom - though it still trumpets recent product releases like Yahoo (NSDQ: YHOO) Answers clone Lycos iQ, it had been losing money at a particularly chronic rate in the last two years. Emblematic of the state of affairs, Lycos Europe last year paid Lycos Inc $5.2 million to renew its license to use the brand name, while entering the US itself under a completely different name, Jubii.
The company started a strategic review in April but, though CEO and Bertelsmann family heir Christoph Mohn, who himself owns 12 percent, suggested AOL (NYSE: TWX) and German ad net Tomorrow Focus were keen to bid around €200 million, it’s clear the sale process was flailing.
One option may have been to reunite the disparate Lycos regions - we received word anonymously in August that one suitor was teaming with Lycos Inc’s Korean owner for a bid, but the banks were said to have walked away, citing the company’s poor performance and unrealistic target of turning a profit by 2011. The last prices we heard being talked about were €100 to €150 million. Then Telefonica (NYSE: TEF) took Lycos Europe to court in its native Netherlands, complaining the CEO had not explored all the options for the sell-off. Lycos Europe also has a UK ad sales team, which it’s thought also sells for sites including IMDB and About.com, but the Lycos UK content operations are outsourced to a third-party here.
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