AOL buys Netscape, joins Sun In Java deal

America Online (AOL) announced overnight (Sydney time) that it will acquire Netscape Communications in a stock-for-stock transaction worth $US4.2 billion.

AOL also announced a strategic alliance with Sun Microsystems, including plans to develop Internet devices using Sun's Java programming language.

Under the terms of AOL's deal with Netscape, Netscape stockholders will receive 0.45 shares of AOL common stock for each share of Netscape stock, according to a statement from AOL. Jim Barksdale, Netscape's president and chief executive officer, will join AOL's board of directors after the deal closes, the statement said. Pending regulatory approval, the acquisition is expected to close in the second quarter next year, it said.

AOL will continue to offer Microsoft's Internet Explorer to its AOL online customers, according to the statement. Netscape's Navigator browser is locked in battle with Explorer, and some observers had speculated that an AOL/Netscape deal could eject Explorer from AOL's offerings. AOL will also offer Netscape client software to its users, downloadable from the Web using AOL's ICQ instant messaging capability, according to AOL.

AOL's deal with Sun, which is separate but related to its Netscape acquisition, encompasses a three-year development and marketing agreement, according to AOL. AOL and Sun together will develop the next version of Netscape's Navigator and Communicator software clients and AOL will use Java in its e-commerce offerings, the company said.

AOL and Sun also will jointly develop a suite of easy-to-deploy software designed to help companies and Internet service providers engage in electronic commerce, according to AOL. AOL will buy systems and services from Sun worth $US500 million at list price through 2002, AOL said. For its part, AOL will receive more than $US350 million in licensing, marketing and advertising fees from Sun, AOL said.

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