Takeover Bids Leave Net Stocks Wanting

Takeovers are usually great news for owners of the target companies. But it isn’t working that way for some Internet-related firms:

* Walt Disney Co.’s decision to buy up Infoseek sent that stock down $5.56 on Monday and $2.44 on Tuesday, ending at $43.50.

* Online shopping firm Imall Inc. slid 31 cents to $22 on Tuesday after the company agreed to be bought by Excite@Home Corp. Excite@Home will pay $22.97 in stock for each Imall share, based on Tuesday’s $49.94 closing price of Excite@Home stock.

* CDNow slid $1.94 to $20.31 after agreeing Tuesday to merge into the Columbia House venture of Sony and Time Warner.

The problem for CDNow shareholders was obvious: no indication of what they’ll get, other than shares in a new Columbia House whose market value is as yet undetermined. Imall owners, meanwhile, were offered only a modest premium versus where the stock was.

As for Infoseek, investors aren’t sure what kind of value will be attached to the “tracking stock” that Disney plans to issue in place of Infoseek shares.

For all three targets, there’s another issue: Many investors buy small Net stocks expecting huge gains from the growth of the Net. A merger deal with a much bigger entity removes the prospect of hot returns in coming months by capping the stocks’ value--a good reason to sell, many investors figure.