Walt Disney Co. is negotiating to buy the chunk of Infoseek Corp. it doesn't already own, even as the Magic Kingdom's chief Internet strategist steps down to form his own company.
Disney is considering raising its stake in the Internet search engine provider from 43 percent to 100 percent, and may fuse Infoseek with Disney's own online operations, Infoseek confirmed yesterday in a statement. The companies said, however, that the acquisition, which would be worth around US$1.5 billion, is far from a done deal.
According to the Infoseek statement, the deal might include the issuance of a new stock which would track the Internet business of the two companies.
Any new online progeny of Disney and Infoseek would have to work with Steve Wadsworth, who replaced Jake Winebaum as chairman of Disney's Buena Vista Internet Group yesterday. Earlier in the day, the company announced that Winebaum would leave Disney to start an Internet company with EarthLink Network Inc. Chairman Sky Dayton.
Winebaum had overseen Disney's purchase of 43 percent of Infoseek in June of last year.
The upshot of that deal was the launching of the Go Network portal site in January of this year. The Go Network embraces such popular Web sites as ABCnews.com and ESPN.com, as well as disney.com., and is one of the five most popular sites on the Internet, according to Infoseek.
Infoseek has been looking to ramp up its online presence in the face of stiff competition from market leaders Yahoo Inc. and America Online Inc (AOL). The company is hoping Disney's vast customer base and marketing savvy will help it achieve such ambitions.
Infoseek's stock price reacted ebulliently to the news. Yesterday, Infoseek's shares closed up 17 percent at $43 in Nasdaq trading. The stock remained buoyant in after-hours trades, reaching $51.
Disney stock was more restrained, up 25 U.S. cents to close at $30.87.
Infoseek has been struggling in the markets as of late, as its share price crumbled from a high of over $85 in April to $36.69 at the beginning of trading yesterday.