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AOL-Netscape scrutinized
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January 15, 1999: 4:40 p.m. ET
Justice Dept. said to seek additional information in landmark merger
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NEW YORK (CNNfn) - The U.S. Justice Department is seeking additional information about the proposed $6.5 billion merger between America Online Inc. and Netscape Communications Corp., according to a published report Friday.
The Justice Department action, in the form of a request for information under the Hart-Scott-Rodino antitrust act, is not an attempt to block or alter the terms of the deal, but does suggest intensified scrutiny, according to the report in Friday's Wall Street Journal.
Spokespeople at the Justice Department and America Online declined to comment about the report Friday. A Netscape spokesperson couldn't be reached for comment.
The Justice Department has requested the information as part of its antitrust case against software goliath Microsoft Corp. Microsoft's top ranks have accused the government of ignoring AOL's acquisitions of online-service providers like CompuServe and Mirabilis.
U.S. District Judge Thomas Penfield Jackson, overseeing the Microsoft proceedings, said the AOL-Netscape merger "might be a very significant change in the playing field as far as this industry is concerned."
Under the Hart-Scott-Rodino Act of 1976, all mergers must be submitted to the Federal Trade Commission and the Justice Department's antitrust division before they can be approved for completion. The merger can only proceed if the government does not demand additional information within 30 days of the initial filing.
If the government asks for additional information, federal regulators are given 20 days after the second filing to try to stop the merger.
Under the terms of the proposed merger announced Nov. 24, each share of Netscape (NSCP) would be exchanged for 0.45 share of AOL (AOL) in a deal valued at $4.3 billion at the time.
Since the merger was announced, shares of AOL have skyrocketed, putting the value of the deal at more than $6.5 billion by the close of trading Friday.
Shares of Netscape rose 1-3/8 to 62-7/8 Friday, while AOL added 2-1/2 to 147.
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