(Continued)

Despite the huge drop in Lycos's value since Terra bought it, the sale of the U.S. unit could have a positive effect on Terra's earnings as the Spanish firm wrote off goodwill on the initial purchase in 2002, the source said.

In other news, on Wednesday it was reported that Merrill Lynch dropped out of the list of underwriters taking part in the upcoming initial public offering of Google, mostly out of concern that the fees it would generate wouldn't be worth it.

Early Monday, Google disclosed that Merrill Lynch wouldn't be one of the firms that would allow clients to bid for shares in Google's initial public offering, which is being led by Morgan Stanley and Credit Suisse First Boston.

It was Merrill Lynch that decided to take a pass, according to people familiar with the syndicate put together to sell the shares, because of the amount of money Merrill Lynch stood to take in from customers who were awarded allocations.

"The fees are too thin," said one institutional investor who is a client of Merrill Lynch and other firms planning to sell shares in the deal.

"It wasn't worth the trouble."

A Merrill Lynch spokeswoman declined comment. Underwriters who don't get the coveted lead role in an IPO often settle for far less in fees than other banks.

Typically, companies going public pay about 7 percent of the size of the offering in fees, and most of that goes to the lead underwriters.

Other firms in the syndicate of banks get less in fees, but also distribute fewer shares.

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