Digex fuels WorldCom's "generation d"
initiative, accelerating expansion in web hosting
marketplace
CLINTON, Miss., and TAMPA, Fla. - September 5, 2000 - WorldCom, Inc.
(NASDAQ: WCOM) and Intermedia (NASDAQ: ICIX) today announced that they
have signed a definitive merger agreement. As a result of this
transaction, WorldCom will acquire a controlling interest in Digex
(NASDAQ: DIGX), a leading provider of managed Web and application
hosting services for some of the world's fastest growing companies.
The transaction was approved by the boards of directors of each of
Digex, Intermedia and WorldCom at meetings held on the afternoon of
Friday, September 1, 2000. This merger will fuel WorldCom's web
hosting expansion by providing a comprehensive portfolio of mission
critical hosting products and services for mid- and large-sized
businesses.
Under terms of the agreement, each share of Intermedia common stock
will be exchanged for $39 of WorldCom common stock, subject to a
collar. In addition, each share of Intermedia preferred stock will
receive WorldCom preferred shares that will have terms essentially
identical to the Intermedia preferred shares except that the issuer
will be WorldCom.
The actual number of WorldCom common shares to be exchanged for each
Intermedia common share (the "Exchange Ratio") will be
determined based on the average trading prices prior to the closing,
but will not be less than 0.8904 shares (if WorldCom's average
stock price exceeds $43.80) or more than 1.1872 shares (if
WorldCom's average stock price is less than $32.85). However, in
the event the Exchange Ratio is higher than 1.0685, WorldCom may elect
to pay the difference between the Exchange Ratio and 1.0685 in cash,
rather than additional WorldCom Stock. The total value of the
transaction is approximately $6 billion ($3 billion in equity and $3
billion in debt and preferred stock). The merger will be tax-free to
shareholders and accounted for as a purchase.
Through its acquisition of Intermedia, WorldCom will own
approximately 55% of Digex's equity interest and 94% of Digex's
voting interest. The resulting combination will:
- combine Digex's impressive range of managed, enterprise and
portal hosting solutions with WorldCom's worldwide,
facilities-based network and relationships with leading businesses
around the globe - provide WorldCom and Digex customers with a more complete
portfolio of products and services to help grow their e-business - enable WorldCom and Digex to offer key solutions for emerging and
established Internet-based businesses and portals as well as
established businesses who are leveraging e-business to open new
markets, lower costs, improve customer satisfaction and broaden
distribution - build on WorldCom's deep reservoir of e-business talent
focused on a full range of services, from web hosting to complex
solutions - focus WorldCom's capital investments in one of the
industry's fastest growing segments - enable WorldCom to strategically integrate Intermedia network
facilities to improve WorldCom's local presence in key
markets.
Bernard J. Ebbers, president and chief executive officer of WorldCom
said, "WorldCom has already staked its claim as the pre-eminent
communications company for the digital generation. With this merger,
WorldCom accelerates by 12 to 18 months our ability to provide
world-class managed web and application hosting services -- one of the
highest growth markets in the industry. This merger will strengthen
both Digex and WorldCom by creating premier web hosting products and
services that our customers are demanding. WorldCom and Digex will
offer an unmatched, comprehensive suite of access, transport, and
applications solutions to customers around the globe. Additionally,
Intermedia and Digex employees will prove to be the most important
assets we gain through this transaction. Combined with WorldCom's
current employees, we will continue to define and lead the
industry."
David C. Ruberg, chairman, president and chief executive officer of
Intermedia and Chairman of the Board of Digex said, "This is an
exciting transaction for Intermedia's stakeholders. With our
employees' hard work and dedication, Intermedia has developed into
one of the leaders in our sector. By joining WorldCom, Intermedia and
Digex are even better positioned to provide customers with
next-generation data and Web hosting solutions. WorldCom is a
world-class organization and a good home for Intermedia and
Digex."
Mark Shull, president and chief executive officer of Digex said,
"We are extremely excited to have WorldCom as our new parent. It
is an incredible combination. Digex pioneered managed hosting. Our
focus for the past five years has been to scale and automate the
provisioning and management of complex hosting in the Internet. Today,
we are the industry leader in delivering pre-engineered platforms for
complex hosting and operating them from a centrally managed operations
center. With WorldCom, we have an amazing opportunity to combine these
with WorldCom's industry leading enterprise customer base, global
IP network and massive data center footprint."
Shull continued, "The possibilities are limitless as we look to
build the next generation of hosting. Today we build solutions that are
deployed into our data centers. With this relationship, we can now move
aggressively to the next step where computing and content distribution
move directly out into the network. With this level of resources and
support, Digex is raising the bar for Internet processing
world-wide."
The merger is subject to the approvals of Intermedia shareholders as
well as approvals from the U.S. Department of Justice, the Federal
Communications Commission and various other governmental authorities.
The companies expect the merger to close early in 2001.
ABOUT WORLDCOM
WorldCom (NASDAQ: WCOM) is a global leader in
"all-distance" communications services with operations in
more than 65 countries. Revenues in 1999 were $37 billion, with more
than $15 billion from high-growth data, Internet and international
services. WorldCom provides facilities-based and fully integrated
services to facilitate e-business and e-commerce in the digital
generation. For more information go to http://www.wcom.com.
ABOUT INTERMEDIA
Intermedia Communications is one of the nation's fastest growing
communications companies and is focused on the next generation of
integrated, data-centric solutions for business customers.
Intermedia's unique perspective on the dynamic business
communications marketplace allows it to tailor a suite of data,
Internet, voice and advanced network services to the individual needs
of approximately 90,000 small and medium-sized business customers.
Intermedia leads as the largest independent Competitive Local Exchange
Carrier (CLEC); a significant frame relay provider; a top five systems
integration provider; a leading Internet Service Provider (ISP); and
the largest multi-tenant services provider. Additional information on
Intermedia is available at http://www.intermedia.com.
ABOUT DIGEX
Digex (NASDAQ: DIGX) is a leading provider of managed Web and
application hosting services for some of the world's leading
companies that rely on the Internet as a critical business tool. Digex
customers, from mainstream enterprise corporations, Internet-based
businesses and Application Service Providers (ASPs), leverage Digex
services to deploy secure, scaleable, high performance business
solutions, including electronic retailing, online financial services,
online procurement and customer self-service applications. Digex also
offers value-added enterprise and professional services, including
performance and security testing, monitoring, reporting and networking
services. Additional information on Digex is available at
www.digex.com.
Forward Looking Statements
Information contained in this release with respect to the financial
impact of the proposed transaction is forward looking. These statements
represent the companies' reasonable judgements with respect to
future events and are subject to risks and uncertainties that could
cause actual results to differ materially. Such factors include, but
are not limited to, material adverse changes in economic and
competitive conditions in the markets served by the companies, material
adverse changes in the business and financial condition of either or
both companies and their respective customers, uncertainties concerning
technological changes and future product performance, and substantial
delay in the expected closing of the transaction.
FINANCIAL ANALYST CONFERENCE
There will be a financial analyst conference call today, Tuesday,
September 5, 2000 at 9:30 a.m. CDT (10:30 a.m. EDT) that can be
monitored through the world wide web at www.wcom.com/investor.
PRESS CONFERENCE
There will be a press conference call today, Tuesday, September 5,
2000 at 10:45 a.m. CDT (11:45 a.m. EDT). You may call into the press
conference by dialing 888-469-1053, passcode: WorldCom.
