Jupiter Media Metrix-NetRatings Call Off Merger
In a joint statement, the two companies said they mutually agreed to call off the merger after "extensive discussions with the staff" of the Federal Trade Commission. The companies said FTC staff indicated they "would strongly recommend" that the FTC challenge the merger.
The FTC would not confirm that it had discussed opposition to the merger with NetRatings or Jupiter Media Metrix.
"The commission does not comment on investigations in progress," said FTC spokesman Mitchell Katz. "In fact, we have not even confirmed publicly if we are looking into that deal."
NetRatings said last October that it planned to acquire ratings rival Jupiter Media Metrix for about $71.2 million. The agreement required that 30 percent to 50 percent of the deal be paid in cash. NetRatings also agreed to lend Jupiter up to $25 million under a secured credit facility that Jupiter would use to replace a standby letter of credit that it has with chairman Tod Johnson.
The transaction, which was expected to close in the first quarter, called for Jupiter stockholders to receive 0.1490 NetRatings shares or $1.95 in cash for each of their Jupiter shares, whichever was more.
Both companies said it was the loan and security agreements that the FTC was not happy with.
"The FTC staff has indicated that it would strongly recommend that the FTC challenge the loan and security agreement that the companies entered into in conjunction with the acquisition agreement," the companies said in a joint statement. "The FTC staff also rejected alternative loan structures proposed by the companies."
Neither company will have to pay a breakup fee.
Jupiter Media Metrix said in a statement that the company plans to form a committee to explore future options and that it has retained investment banker Robertson Stephens Inc.
Interestingly, Jupiter Media Metrix in January reinstated its patent lawsuit against NetRatings. The lawsuit not only seeks a permanent injunction precluding NetRatings from using the patent for computer tracking, but also monetary damages.
Susan Hickey, a spokeswoman at Jupiter Media Metrix, said reinstating the lawsuit was a way for the company to protect itself if the merger was not completed.
"As part of the merger agreement, the two companies agreed to put the patent litigation 'on hold,'" she said earlier this month. "On Jan. 18 we announced that while we intend to continue our work to close the merger, we were also restarting the patent litigation to protect our position should we need to litigate in August. When the merger is completed, of course, we will terminate the litigation."
The trial is scheduled to begin Oct. 28, Jupiter Media Metrix said.
Meanwhile, NetRatings has a strategic relationship with television audience measurement firm Nielsen Media Research and market information research provider ACNielsen. NetRatings also said that it plans to buy the 80.1 percent of ACNielsen eRatings.com that it does not already own, for about $16.4 million. ACNielsen eRatings.com is an Internet audience measurement firm with operations outside the United States. That deal was contingent upon the closing of the Jupiter Media Metrix deal. NetRatings said it does not know if it will go through with that deal now.
Separately, NetRatings also said yesterday that it would eliminate 20 positions, or about 15 percent of its workforce, and discontinue its AdSpectrum and eCommercePulse services. The move is expected to save the company $6 million to $8 million in the first quarter.