Daum looks abroad; may acquire Lycos

Daum Communications, which runs the largest portal site in Korea, is looking to take over Lycos, formerly a major U.S. Internet portal. A company official announced yesterday that it is negotiating with Terra Networks, the Spanish company that owns Lycos, but that no final decisions have been made. On Wednesday, Dow Jones reported that a certain Korean Internet company had tentatively agreed with Terra to take over Lycos for 75 million euros ($90 million) and that the particulars of the conditions would be confirmed by this weekend. In a telephone interview with the JoongAng Ilbo, Daum President Lee Jae-woong said that the company would take an active part in mergers or takeovers if synergies existed. “Although matters are undecided, we have a very aggressive position on supplementing our weaknesses and are willing to forge bonds with any company that can complement us,” Mr. Lee said. Analysts say Daum’s move to buy Lycos is part of a larger plan to become a global Internet player. Recently, the company invested 8.8 billion won ($7.5 million) to buy Cafesta, the largest community portal site in Japan. It reportedly also considered buying several famous Internet firms in the United States to enter the U.S. market. Not long ago, the company issued about 90 billion won of corporate bonds, saying that it needed the funds to strengthen its search engine and shopping divisions. “Lycos is probably attractive to Daum because the brand is already well known in most of the world except for Europe,” an analyst said. Lycos was once one of the three largest Web portals in the United States, along with Yahoo and AOL, but has slipped to sixth place. In 2000, Spain’s largest telecom company, Telefonica, the main shareholder of Terra, bought Lycos for $12.5 billion. Market response has been negative. Brokerages such as LG Investment and Securities and Sejong Securities said that Lycos would create more deficits than synergy. Yesterday, Daum shares fell 8.3 percent to 32,750 won. by Suh Kyung-ho, Yoon Chang-hee