March 17, 1999 11:40 AM PST
Shareholders approve AOL, Netscape deal
At a special meeting this morning, Netscape shareholders voted 99.75 percent in favor, less than 0.25 percent against the deal that will give them 0.9 shares of AOL common stock for each share of Netscape common stock. The transaction will be handled as pooling of interests.
"Next week we will lay out more information on how the companies will operate going forward, and the following week we will have additional information on the Sun alliance," AOL spokesman Jim Whitney said, referring to the complex deal under which Sun will market Netscape's enterprise software in return for about $1 billion in cash and guaranteed sales over the next several years.
Operating plans for Netscape are being finalized this week, and the vision for the combined companies will be unveiled next week.
Netscape employees apparently will have to wait for next week to determine their futures with the company, although they have effective today been granted 30 days of extra pay as an incentive to stick around. But items like stock options in AOL for Netscape employees haven't been clarified. A source at AOL admitted the one-month pay is "symbolic as much as anything else."
Several dozen shareholders appeared at a Santa Clara hotel at 8 a.m. PT for the vote. Netscape CEO James Barksdale spoke briefly, then left just after the vote, the last hurdle before Netscape becomes a wholly-owned subsidiary of AOL.
"We are looking forward to working with AOL, which will have many exciting announcements in coming weeks," said Barksdale, who will join AOL's board of directors.
The deal, which includes a strategic alliance between AOL and Sun Microsystems, was approved by the Justice Department last week. Shareholders at the meeting lauded the deal, and expressed little sentimentality.
Today is the last day Netscape stock will trade publicly.
"I think it's marvelous," said Sarah Green, president of computer training firm CompuTerrific, who has owned Netscape stock for about four years and intends to hold the AOL shares she'll get in exchange when the acquisition closes.
Gene Hsu bought Netscape stock at about 44 in the wee hours on the day the deal was announced in November, placing a buy order through his online broker. "I wanted to get into AOL," he said.
"It's a very good marriage. Netscape was not going to get anywhere by itself. I have no sadness--this is good for everyone," said Hsu, a Los Gatos, California, resident.
The merger was valued at $4.2 billion when it was announced November 24, now is worth $8.98 billion as AOL's share price more than doubled and its stock split two-for-one last month.
Netscape was founded in 1994 by Jim Clark and Marc Andreessen and pioneered Internet browsing with its Mosaic product. The company had a spectacular debut on the stock market in August 1995, but its success put it directly in the crosshairs of Microsoft, the dominant desktop software vendor. Netscape struggled to keep a dominant share of the browser market and had mixed success selling enterprise software and shaping its portal site, Netcenter, into a top destination on the Web.
Shares of Netscape have soared in recent weeks, hitting an all time high of 94.0625 yesterday.