America Online, Inc. to Acquire Netscape Communications in Stock
Transaction Valued at $4.2 Billion
Acquisition To Significantly Advance AOL's Multiple Brand Strategy,
Broaden Audience, and Take E-Commerce to New Level
AOL To Operate Most Popular and Diverse Family of Brands in Cyberspace
AOL and Sun Microsystems, Inc. to Develop Next Generation of E-Commerce
Solutions and Internet Devices
DULLES, VA, November 24, 1998 -- America Online, Inc. (NYSE: AOL) today
announced that it will acquire Netscape Communications Corporation
(NASDAQ: NSCP) in a transaction that will extend America Online's
leadership in interactive services.
The stock-for-stock, pooling-of-interests transaction, in which
stockholders of Netscape will receive 0.45 shares of AOL common stock for
each share of Netscape common stock, is valued at $4.2 billion. It is
expected to close in the spring of 1999, subject to various conditions
including customary regulatory approvals and approval by Netscape's
shareholders. The Company said it expects the transaction will be
slightly accretive to operating results. Netscape's operations will
remain based in Mountain View, CA.
Key benefits of the acquisition will be to:
Advance America Online's multiple-brand strategy with one of the
Internet's best known brands; Substantially broaden America Online's
global audience at home and at work, by adding the fast-growing Netscape
Netcenter portal that is integrated with the Netscape browser used by
millions of people; Accelerate the growth of e-commerce across the
America Online and Netscape brands and provide added value to their
business partners; Provide significant new opportunities to make America
Online's brands available anywhere to interactive consumers, as well as
to maximize the value of these brands, by taking advantage of AOL's
existing shared infrastructure; and Expand the range of America Online
products and services by adding world-class technology and an experienced
development team that has demonstrated its ability to innovate rapidly.
Separately, America Online announced that it has entered into a strategic
development and marketing alliance with Sun Microsystems, Inc. to enhance
its delivery of e-commerce solutions that will help build revenues across
America Online and Netscape brands, and offer added value to both America
Online and Netscape business partners, as well as the growing number of
major corporations planning to put their business on the Internet. The
companies will develop easy-to-deploy, end-to-end solutions for
e-commerce based on the best available technologies and expand their
sales channels to include each other's products and services.
The three-year America Online-Sun agreements also will increase
distribution and development of Netscape's enterprise software for
corporate customers. The companies also will use Sun's Java technology to
offer AOL services on selected Internet devices, consistent with AOL's
"AOL Anywhere" strategy to extend its brand to all emerging mass market
platforms. (See separate America Online-Sun Microsystems release.)
Most Popular and Diverse Family of Brands in Cyberspace With Netscape
joining its AOL, CompuServe,
AOL.COM, AOL Instant Messenger, ICQ, and
Digital City brands, America Online will operate the most popular and
diverse family of brands in cyberspace.
Steve Case, Chairman and Chief Executive Officer of America Online, said:
"The acquisition of Netscape is a big step forward for America Online
that will greatly accelerate our business momentum. Netscape has played a
key role in helping consumers benefit from the enormous power of the
Internet, and we share the same mission. With Netscape, we will broaden
our global audience at home and at work, and add world-class technology
to support an expanded range of America Online interactive products and
services."
Mr. Case added: "The development of e-commerce is entering an exciting
new stage. Increasingly, companies are seeing the power of the Internet
as central to their business strategies and consumers are seeing the
convenience of online shopping as central to their lives. Netscape's
highly regarded suite of e-commerce software, coupled with our strategic
alliance with Sun, will help us drive e-commerce to a whole new level
that will benefit both business partners and Internet consumers."
Mr. Case continued: "We have been very impressed with how quickly
Netscape has transformed its business -- shifting its focus away from
browsers and platforms and toward high-growth portal and e-commerce
opportunities. We look forward to welcoming the Netscape team to our
America Online family. Having known each other for many years, we know
that together we can take the Internet to the next stage of its
development. And as interactive services become more central to the daily
lives of tens of millions of people, the promise of e-commerce becomes
even more of a reality for consumers and businesses."
Mr. Case concluded: "One key to this acquisition is the flexibility that
it gives us. ICQ, our instant communications and chat portal, will
promote the downloading and registration of the Netscape client software
to its large and rapidly growing international community. We also expect
to maintain our working relationship with Microsoft, continuing to
include Internet Explorer in the AOL service so consumers will continue
to have AOL software included on the Windows desktop."
Bob Pittman, President and Chief Operating Officer of America Online,
said: "Netscape has always been one of the best-known and most highly
renowned Internet brands. Over the past year, Netscape has extended that
brand into the portal space with Netscape Netcenter, and developed a
truly differentiated portal by building useful links between the service
and the Netscape client software and Netscape's enterprise business.
Although Netscape Netcenter is already one of the fastest-growing
portals, we believe our existing shared infrastructure will enable us to
efficiently expand its audience and build its revenue streams. With AOL,
CompuServe, ICQ, Digital City and now Netscape Netcenter, we will offer
an unparalleled array of interactive services to the full spectrum of
Internet consumers as well as to our commerce and content partners."
Mr. Pittman added: "America Online has made great progress over the past
few years in taking e-commerce from promise to reality, but we've only
scratched the surface in reaching its full potential. Our acquisition of
Netscape and the alliance with Sun will allow us to accelerate our
e-commerce efforts. We will add complementary, best of breed tools and
platforms to speed the time to market for companies now wanting to enter
e-commerce, as well as for those ready to scale their businesses further.
This will be of enormous value to both America Online and Netscape
commerce partners P both business-to-business and business-to-consumers P
and provide even more convenience for Internet shoppers."
The Company said Jim Barksdale, President and Chief Executive Officer of
Netscape, will be joining America Online's Board of Directors after the
transaction closes.
Mr. Barksdale said: "America Online and Netscape share a common vision -
to offer solutions that make it simple for businesses and consumers to
participate fully in the Net Economy. The companies' complementary
strengths promise to accelerate the adoption of e-commerce and Internet
applications worldwide. This exciting partnership enables us to deliver
even better and more complete products and services to both existing and
new customers."
Netscape Brand Synonymous With Internet The Netscape brand is virtually
synonymous with the Internet, including such widely used products as
Netscape's browser, Netscape Netcenter, and Netscape's suite of
enterprise and e-commerce applications and software. America Online will
be able to efficiently speed the development of Netscape's products and
services with its shared infrastructure, current advertising and commerce
relationships, and ability to drive traffic from its other brands. In
addition, the Netscape portal will offer connections to other America
Online brands to maximize utility for customers and its value to the
Company.
Launched in June, Netscape Netcenter is one of the Internet's fastest
growing portals worldwide in registrations, traffic and software
downloads. Netscape Netcenter now has more than 9 million registered
members. Since June, daily traffic has increased by 50%. In the most
recent quarter, worldwide downloads exceeded 24 million, fueled in part
by the release of both new beta and final versions of its browser
software.
In addition, Netscape has announced plans to enhance Netscape Netcenter
with the recent acquisitions of AtWeb Inc., to link more than 600,000
small-business Web sites to the portal, and NewHoo! Community Directory
Project to provide comprehensive Internet directory service. Netscape
also has introduced the "Netscape TuneUp for IE," a free software add-on
to Microsoft Internet Explorer that integrates Netscape's popular Smart
Browsing services while providing access to Netscape Netcenter services.
Netscape has transformed itself over the past year into a successful
portal and enterprise/e-commerce software business. The Company currently
offers a full suite of packaged applications for business-to-business and
business-to-consumer Internet commerce, and award-winning Internet server
software for building and hosting a variety of Internet applications.
Netscape's corporate customers using the Company's e-commerce and
infrastructure software suite include Ford, Lucent Technologies, Bell
Canada, France Telecom, John Hancock and the US Department of Defense.
In July, Netscape introduced its newest browser, Communicator 4.5,
designed to link Netscape Netcenter's content and services with the
browser's ease-of-use advances P making it simpler for people to find
what they want on the Internet and creating a persistent relationship
with users that helps generate higher usage levels. This month, Netscape
is introducing the Custom Portal to bring the power of consumer portals
to business and government audiences, including Internet service
providers and computer manufacturers. As part of its effort to drive more
traffic to Netscape Netcenter, America Online said it plans to continue
to develop the Communicator and pursue new distribution channels.
Unique Technology Solutions for E-Commerce Partners The Company said its
strategic alliance with Sun Microsystems will bring together America
Online's industry-leading consumer reach, Sun's e-commerce hardware and
operating system platforms, and Netscape's complementary suite of
e-commerce software. Together, the companies will be able to offer
complete turnkey solutions along with modular software and consulting
services to enable e-commerce partners to put their businesses online
fast and scale quickly to meet consumer demand.
"The interactive marketplace is changing quickly, and it is clear that
America Online is a leader in driving e-commerce forward," said Scott
McNealy, President, CEO and Chairman of Sun Microsystems. "We are
incredibly excited about the opportunity to work closely with the world's
leading provider of branded interactive services and to integrate our
full-range of products and services into the most comprehensive turnkey
e-commerce solutions."
Under the America Online-Sun alliance, both companies will sell products
and services through each other's sales channels and customer
relationships to market their existing products and services, as well as
their new e-commerce solutions. Sun's large sales and service
organizations will provide technical support for these products and
services. The alliance also will bring new development and distribution
opportunities for Netscape's software and applications.
About America Online America Online, Inc., based in Dulles, Virginia, is
the world's leader in branded interactive services and content. America
Online, Inc. operates two worldwide Internet online services: America
Online, with more than 14 million members; and CompuServe, with
approximately 2 million members. America Online, Inc. also operates AOL
Studios, a leading builder of Internet brands for new market segments.
Other branded Internet services operated by America Online, Inc. include
AOL.COM, the world's most accessed Web site from home; Digital City,
Inc., the No. 1 branded local content network and community guide on AOL
and the Internet; AOL NetFind, AOL's comprehensive guide to the Internet;
AOL Instant Messenger, an instant messaging tool available on both AOL
and the Internet; and ICQ, an instant communication and chat technology
on the Internet.
This release contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. The forward-looking statements are based on management's
current expectations or beliefs as well as on a number of assumptions
about future events, and are subject to factors and uncertainties that
could cause actual results to differ materially from those described in
the forward-looking statements. The reader is cautioned not to put undue
reliance on forward-looking statements, which are not a guarantee of
future performance and are subject to a number of uncertainties and other
factors, many outside America Online's control. The forward-looking
statements in this release address subjects including the expected date
of closing the acquisition, future financial and operating results,
growth of the Company's audience, growth of the online commerce industry,
and the development and success of new online commerce technology and
platforms.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: the
risk that the Netscape business will not be integrated successfully into
the Company's business; costs related to the merger; inability to obtain
approval of Netscape stockholders; inability to obtain, or meet
conditions imposed for, governmental approvals for the merger; increased
competition and its effects on pricing, spending, third-party
relationships, the subscriber base and revenues; reliance on network
service providers; inability to identify, develop and achieve commercial
success for new products and services and access and distribution
technologies pursuant to the development and marketing agreements with
Sun; risks of new and changing regulation in the U.S. and
internationally.
For a detailed discussion of these and other cautionary statements,
please refer to the Company's filings with the Securities and Exchange
Commission, especially in the Forward-Looking Statements section of the
Management's Discussion and Analysis section of the Company's Form 10-K
for the fiscal year ended June 30, 1998 and in the 10-Q for the quarter
ended September 30, 1998, and in the Risk Factors section of the
Company's most recently filed registration statement on Form S-3 filed in
June 1998.
Netscape and the Netscape N Logo are registered trademarks of Netscape
Communications Corporation in the United States and other countries.
Other Netscape logos, product names, and service names, including
Netcenter, Smart Browsing, Netscape Contact, Mozilla, and Netscape Open
Directory are also trademarks of Netscape Communications Corporation.
Other product and brand names are trademarks of their respective owners.