WorldCom, Intermedia Agree to Merge for $6 Billion

By Jennifer Freer, Staff Writer


SEPT. 6 ? WorldCom Inc. and Intermedia Communications Inc. signed a definitive merger agreement Sept. 5 for $6 billion, company officials said.


The deal includes $3 billion in equity and $3 billion in debt and preferred stock. Under terms of the agreement, each share of Intermedia common stock will be exchanged for $39 of WorldCom common stock.


Through this acquisition, WorldCom of Clinton, Miss., will acquire a 55 percent controlling interest in Digex, a Beltsville, Md., company owned by Intermedia, a Tampa, Fla.-based communications company. Digex provides managed Web and application hosting services. WorldCom also will own about 94 percent of Digex's voting interest.


Intermedia serves the states of New York and Florida, and Digex serves many government customers.


"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," said Bernard Ebbers, president and chief executive officer of WorldCom.


WorldCom had revenue in 1999 of $37 billion, with more than $15 billion from high-growth data, Internet and international services.


"This merger will strengthen both Digex and WorldCom by creating premier Web-hosting products and services that our customers are demanding," Ebbers said.


WorldCom is gaining Digex's range of managed, enterprise and portal hosting solutions. This will enable WorldCom to integrate strategically Intermedia network facilities to improve WorldCom's local presence in key markets.


By joining WorldCom, Intermedia and Digex are even better positioned to provide customers with next-generation data and Web-hosting solutions, said David Ruberg, chairman, president and CEO of Intermedia and chairman of the board of Digex.


The merger is subject to the approvals of Intermedia shareholders, the Justice Department, the Federal Communications Commission and various other governmental authorities. The companies expect the merger to close early in 2001.