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Madrid (pte044/28.05.2003/16:44) - Spanish telecoms giant Telefonica http://www.telefonica.com has announced it plans to completely take over the crisis-ridden Internet portal Terra Lycos, making an offer of up to 1.73bn euros for the deal.
The Spanish group already owns 38.6 per cent of Terra Lycos, which recently reported an annual loss of 2.01bn euros.
The offer amounts to 5.25 euros in cash per share - about 15 per cent above the average value of Terra Lycos shares during the past six months.
The outlook for Terra Lycos is bleak. Due to the lag on the US advertising market and the depreciation of Latin American currencies, the portal will most likely book losses until 2005. However, Telefonica expects the complete integration of the portal to yield significant savings and improve the group's ebitda by 269m euros by 2006.
As part of Telefonica, Terra Lycos would focus on online services, while Telefonica would run the Internet access business.
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