The long expected termination of the close relationship between Excite Inc and Netscape Communications Corp was confirmed yesterday by Excite. The pair signed a two-year agreement in April 1998 for Excite to provide content to Netscape’s Netcenter portal and for it to become its preferred search engine partner.
However, once the acquisition of Netscape by America Online Inc had closed, which it did in March, Excite, which itself is in the process of being acquired by @Home Networks Inc, had the option to terminate the agreement. This it has now done and the agreement will end on June 17.
As part of the termination agreement, Excite says Netscape may be required to refund Excite amounts prepaid or costs Excite has incurred in performing under the Netcenter agreement. It estimates those costs at $45m, but nobody at Excite got back to us to explain under what circumstances AOL-Netscape has to pay back the money.
Excite paid Netscape an upfront $70m, last year and granted Netscape warrants in two tranches. Netscape has exercised the first tranche, which it completed on March 31 and the second tranche is exercisable for a two-year period beginning April 30 this year. It is a warrant to purchase 72,411 shares at about $138.10 per share. Excite closed yesterday down $10.1875, or 7.2% at $140.1875.
