The collar allows renegotiations if Terra's share price rises or falls sharply before the merger is complete. Part of the reason is that three analysts downgraded Lycos after the announcement, citing the high premium paid and the risk in Terra shares. Terra just went public in November and has significantly lower trailing 12-month revenue than Lycos.
Many investors are wary of owning foreign stocks, especially untested ones.
Lycos has howled in the past about how the market isn't valuing it properly. Perhaps most importantly, now that Lycos has accepted an offer from a company that many investors don't think of as a top-tier ISP, it has called its own value into question. Chief prosecutor Joel Klein, lead attorney in the Microsoft antitrust trial, has asked to meet next week with lawyers from the two telephone titans, the report says. The company cited its decision not to hold a big sale in the first quarter of this year, as it did last year. The government maintains that a swift resolution of the matter is necessary to restore competition.