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AOL, CompuServe talk
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April 7, 1997: 6:55 a.m. ET
Online providers reportedly negotiate over the weekend about merger
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NEW YORK (CNNfn) -- America Online Inc. held talks over the weekend with CompuServe in an attempt to negotiate a $1.2 billion buyout of the ailing online service provider.
The terms would be based on a price of about $11 to $14 a share, the Wall Street Journal reported Monday. AOL would have to issue roughly 26 million new shares to acquire its rival from H&R Block Inc., which owns 80% of CompuServe.
The two sides still have to hammer out the price. Shares of CompuServe rose to 13-5/8 last week on news of a possible merger but AOL may push for the pre-rumor price of $11 per share.
AOL, the nation's largest online service provider, is attempting to fend off challenges by Microsoft Corp. and AT&T Corp., who have made inroads with their Internet services.
CompuServe's 3 million customers would push AOL over the 10 million user mark and would give AOL CompuServe's prized European operation which leads that market with 1 million customers.
AOL has seen its service pushed to, and past, the limits of its capabilities by a new unlimited-service plan it began offering for $19.95 per month. Users have often found it very difficult to log on to the service. The addition of CompuServe would relieve some of that burden.
H&R Block is probably looking to get out of an acquisition that once looked promising. Last year it planned a spin-off of CompuServe but withdrew it as Internet stocks declined. Since then CompuServe has ceded the consumer market to AOL and closed a new service aimed at beginners called WOW!
Shares of CompuServe (CSRV) rose 7/8 to 13-5/8 on the Nasdaq Friday, while AOL stock (AOL) gained 2-7/8 to 48-3/8.
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