Netscape buy puts AOL in fast lane

Alliance with Sun Microsystems unveiled along with $4.2 billion share swap deal with internet browser firm.

Internet giant AOL will buy Netscape Communications for $4.2 billione swap deal with internet browser firm. and form a three-year development and marketing alliance with Sun Microsystems.

The deal will take the form of a stock swap and is expected to close by spring 1999 when Jim Barksdale, president of Netscape, will join AOL's board of directors.

AOL also revealed that it had entered an alliance with Sun to accelerate the growth of enterprise class e-commerce and to develop next-generation internet devices.

'The acquisition of Netscape is a big step forward for AOL and will greatly accelerate our business momentum,' said Steve Case, chairman of AOL.

'With Netscape, we will broaden our international audience at home and at work and add world-class technology to support an expanded range of AOL interactive product and services.'

AOL will promote the downloading of the Netscape browser to its 14 million users, although at present it will continue to include Microsoft's Internet Explorer browser in the AOL service.

The effects of the deal on the UK market remain to be seen. Mark Norman, managing director of Unipalm, Netscape's sole UK distributor, said: 'We've been told it's business as usual, but it depends on how entrepreneurial the companies want to be. It's a great opportunity for Sun. It'll be interesting to see what the next step will be.'

Barksdale denied the move had anything to do with the ongoing Microsoft investigation: 'This has been done for the good of Netscape. It will not affect the Department of Justice case.'

Harry Hoyle, vice president of analyst Inteco, added: 'Netcenter is many people's default start page, and that gives AOL access to a huge audience.'