German rivals United Internet and Tomorrow Focus were also reportedly approached. The FTD’s undisclosed source says the owners seek a price tag of around EUR200m (USD315.7m) for Lycos. This compares to the firm’s current market cap of EUR160m (USD252.5m) on the Frankfurt stock exchange.
Lycos’ low competiveness is also said to be an obstacle to the firm’s sale. The portal trails behind rivals in popularity in Germany and has failed to grab a major share in the growth of the online advertising market, says the FTD. The firm posted a loss of USD8.2m (EUR5.6m) in Q1 2008 and has steadily posted operative losses in the past years.
In addition, a sale is reportedly complicated by the Bertelsmann family, which opposes stripping Lycos’ assets. “Shareholders want to avoid splitting Lycos Europe in order to save the reputation of CEO Christoph Mohn and Bertelsmann,” says the FTD-source. A split of Lycos Europe’s businesses would likely result in job cuts, with layoffs possibly taking places at Bertelsmann headquarter in Gutersloh, Germany. Around 400 of Lycos’ 700 employees work in Germany.