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The Wall Street Journal is reporting this morning that H&R Block is close to an agreement with Welsh, Carson, Anderson & Stowe, a leveraged-buyout firm, to sell most of its approximately 80% interest in CompuServe. The terms of any deal were not available. The WSJ also reports that HRB is still considering an offer from Bertelsmann AG, a partner of America Online. In addition WorldCom Communications is also reported to have made an offer under consideration. WorldCom owns the giant Internet access provider UUNet Technologies.

According to an executive familiar with the situation, one snag in the buyout talks with AOL last April was that Block was trying to avoid a deal that involved "too much AOL stock." At the time, AOL stick was trading in the mid 40's. As I post this, AOL is trading at about 70 1/2. A CompuServe executive is quoted as saying Block "can't make anything happen without studying it for a couple of years."

Welsh Carson has been building a business information empire and it is said will eventually be interested in the 20% of CompuServe stock that is publicly traded. They are attempting to compete with other information services such as Reuters Holdings, Bloomberg, and Dow Jones. They recently paid $275 million for Knight-Ridder Financial and $178 million for Bridge Information Systems. Bridge and CompuServe are seen as a good fit, with Bridge providing financial content to a CompuServe refocused on its traditionally more business-oriented subscriber than the more general-interest customers of AOL and MSN.

Then there is the question of CompuServe's network services division, which is seen as the real value in any acquisition of CompuServe. Welsh Carson could decide to sell off the dwindling CompuServe subscriber base of under 3 million world wide.

The WSJ says that a Block board meeting could be held "as soon as this evening" to go over the offers.

The WSJ also said that Block, CompuServe, and Welsh Carson "all declined to comment."

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