Lycos Up as Investor Slams Diller Deal

Shares of Lycos Inc., the No. 3 Internet search service that USA Networks Inc. wants to buy, rose 15% after the chairman of Lycos’ biggest shareholder quit the Lycos board and said he would seek other buyers for the company.

Lycos soared $12.38 to close at $96.25 on Nasdaq. CMGI Inc. Chairman David Wetherell resigned from Lycos’ board, saying the terms of the proposed purchase are inadequate. Lycos lost about one-third of its value after the deal was announced.

CMGI, an Internet venture capital company that owns 18.5% of Lycos, will hold talks with other companies or work to keep Lycos independent, Wetherell said. USA Networks Chairman Barry Diller wants to combine Lycos with his home-shopping and other electronic retail businesses and give Lycos shareholders 30% of the new company.

Lycos had talked with General Electric Co.’s NBC broadcast unit, Time Warner Inc. and CBS Corp. about a possible partnership before agreeing to be bought by USA Networks.

Lycos said in a statement that it remains committed to the purchase by USA. Executives declined to comment further.

USA Networks eased 81 cents to close at $37.69 and CMGI fell $5.25 to $194.44.

“I will simply try to get the best deal” for Lycos shareholders, said Wetherell, who tendered his resignation to Lycos Chief Executive Bob Davis. That could come about by Lycos remaining independent or finding another buyer, he added.

“I [did] all I could as a Lycos board member,” Wetherell said. “I thought that independent from the board, I could pursue other” options for the company.