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Excite Software Firm to Buy Rival McKinley in $10-Million Stock Deal


MOUNTAIN VIEW, Calif. — Excite Inc., a developer of directory and search software for the Internet, said Thursday it will acquire ailing rival the McKinley Group in a stock deal worth about $10 million.

The announcement comes three days after directors of trouble-plagued McKinley--founded by Christine and Isabel Maxwell, daughters of the late British press baron Robert Maxwell--removed the privately held company's president amid mounting financial and management difficulties.

The deal marks the first major consolidation in the volatile World Wide Web search-engine business.

Excite will buy McKinley for 1.2 million shares, or $9.9 million, and will also assume some McKinley debt. The deal was announced after markets had closed Thursday. Excite shares, which recently traded as high as $21.25, fell 25 cents to $8.25 on Nasdaq.

The deal will boost Excite's market share in a crowded Web directory business that also includes Yahoo, Lycos and Infoseek. The company makes money mainly by selling advertising on the World Wide Web site that people go to in order to use the directory and search service.

"This will boost traffic and mind share," Excite President George Bell said in an interview. Bell said he plans to run McKinley's Magellan directory as a separate brand and keep some of the company's editorial and engineering staff. He would not discuss whether the Maxwells or other managers would remain after the buyout, which is expected to be completed by late July.

A McKinley spokeswoman said officers of the Sausalito company would not comment on the acquisition until Friday.

Excite, based in Mountain View, raised more than $39 million in an April public stock offering, and reported $1.1 million in ad revenue during the first quarter of 1996. The company has partnerships with America Online, Apple Computer, CUC Investments, Tribune Co. and the Los Angeles Times.

McKinley had hoped to go public as well but failed to interest investment bankers in such an offering, according to sources close to the company. A previously announced merger with Internet content developer Novo Media Group in San Francisco never materialized.

Despite the setbacks, McKinley--which had attempted to set itself apart by offering mini-reviews of tens of thousands of Web sites--has attracted numerous partners and licensees, including IBM, AT&T, Microsoft, Nynex and Europe Online. The alliances and the Maxwells' ties to Europe were part of McKinley's attraction, Bell said.

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