Takeover Targets See Shares Slide

Takeovers are usually great news for owners of the target companies. But it isn’t working that way for some Internet-related firms:

* Walt Disney Co.’s decision to buy up Infoseek sent that stock down $5.56 on Monday and $2.44 on Tuesday, ending at $43.50.

* Online shopping firm Imall Inc. slid 31 cents to $22 on Tuesday after the company agreed to be bought by Excite@Home Corp. Excite@Home will pay $22.97 in stock for each Imall share based on Tuesday’s $49.94 closing price of Excite@Home.

* CDNow Inc. slumped $1.94 to $20.31 after agreeing Tuesday to sell itself to the Columbia House venture of Sony Corp. and Time Warner. Terms of the agreement were not disclosed.

The problem for CDNow shareholders was obvious: no indication of what they’ll get. Imall owners, meanwhile, were offered only a modest premium versus where the stock was already trading.

As for Infoseek, investors aren’t sure what kind of value will be attached to the “tracking stock� that Disney plans to issue in place of Infoseek shares.

For all three targets, there’s another issue: Many investors buy Net stocks expecting huge gains from the growth of the Net. A merger deal removes the prospect of hot returns in coming months by capping the stocks’ value--a good reason to sell, many investors figure.