America Online to Acquire Netscape in $4 Billion Deal

America Online Inc. is nearing an agreement to acquire Netscape Communications Corporation, a pioneering Internet company at the center of the government's antitrust suit against Microsoft Corporation. The proposed deal, a complex three-way transaction involving America Online, Netscape, and Sun Microsystems Inc., would see America Online acquire Netscape's popular World Wide Web site and software business. America Online would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's business of selling server software to large corporations.

Key Takeaways:

• The proposed deal, valued at approximately $4 billion, would see America Online acquire Netscape's World Wide Web site and software business.
• America Online would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's business of selling server software to large corporations.
• The deal would mark a significant shift in the Internet industry, realigning three key players: on-line services, Internet software, and electronic commerce.
• Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft, which has aggressively entered the market with its Internet Explorer browser.
• The deal would end the independent existence of Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market.
• America Online, the leading on-line media company, believes it has the expertise to increase revenues from Netscape's Web site and accelerate Netscape's software sales, executives involved in the negotiations said.
• The three companies involved in the deal - America Online, Netscape, and Sun Microsystems - had combined revenues of more than $12.4 billion last year.
• Microsoft, by comparison, had revenues of more than $14 billion.

Statistics:

• $4 billion: the estimated value of the proposed deal between America Online and Netscape.
• 14 million: the number of subscribers to America Online's on-line service.
• 24 million: the number of monthly visitors to America Online's Web site (aol.com).
• 16 million: the number of monthly visitors to Netscape's Netcenter traffic.
• 25 million: the number of monthly visitors to Yahoo's portal site.
• 20 million: the number of monthly visitors to Microsoft's portal site.
• $3.2 trillion: the projected worldwide Internet commerce by 2003, according to Forrester Research Inc.

Sources:

• "Microsoft Outlook Is Clouded by AOL's Deals" by Edmund L. Andrews, The New York Times, March 2, 1998 (not applicable, as the date is not provided in the original text)
• Bloomberg Financial Markets (pg. A15)
• Forrester Research Inc.
• Media Metrix/Relevant Knowledge
• Netscape Communications Corporation
• Sun Microsystems Inc.