Cable & Wireless announced on February 1 that it and its wholly owned subsidiary, Digital Island, have completed the acquisition from Exodus Communications, the United States' web hosting provider, in an all-cash transaction, of selected assets and a majority of the business activities of Exodus in the United States. This follows the approval of the US transaction by the United States Bankruptcy Court for the District of Delaware granted on 17 January 2002. Together with the Exodus assets in the UK, Germany and Japan, the acquisition of which is being finalised, the total enterprise value of the transaction will be approximately USD 750 million (EUR 864.6 mln). This final amount is USD 100 million below the USD 850 million value announced on 30 November 2001 as a result of the finalisation of certain estimates outstanding at that time.
Integration and Branding
The Exodus Business will be combined with the hosting businesses of Digital Island and Cable & Wireless to create a world leader in hosting and Internet services. The combined entity will be a separate division of Cable & Wireless Global and has an annualised current run rate of revenue of approximately USD 800 million. It will be supported by the powerful global infrastructure and financial strength of Cable & Wireless to provide a unique offering to business customers around the world. Bill Austin, who joined Exodus in July 2001 and is Chief Financial Officer with additional responsibility for IT, customer care and business development, will become CEO of the new division, reporting to Don Reed, Chief Executive of Cable & Wireless Global. He will lead the process of integrating the Exodus Business with Cable & Wireless' existing hosting businesses which is expected to be largely complete by April 2002.
Based on comprehensive market research, all hosting services currently marketed by Cable & Wireless, Digital Island and Exodus in the USA will be branded "Exodus, a Cable & Wireless Service". All other business activities in the USA will continue under the Cable & Wireless name. In the rest of the world all services will be marketed under the Cable & Wireless brand. The rebranding will be completed by May 2002.
Strategic Rationale and Benefits
Exodus provides managed and co-location hosting services supported by sophisticated systems as well as network management and security solutions, mainly to large corporate customers with mission critical internet operations. Exodus serves approximately 3,200 customers including many leading companies across the financial services, technology, healthcare, automotive and transportation sectors. 15 of the top 25 web properties have chosen Exodus (source: Nielsen/Netratings Inc., December 2001).
The acquisition fits within Cable & Wireless Global's strategy to provide global IP (Internet Protocol) and data services to business customers in the US, Europe and Japan. The acquisition accelerates the development of value-added services and integrated communications and e-commerce solutions, building on the successful acquisition of Digital Island and Cable & Wireless' existing high-performance global IP infrastructure and transactional web services capabilities. This combination positions Cable & Wireless to take full advantage of the predicted growth in managed hosting and web services.
Transaction Details
The Exodus Business comprises substantially all of the Exodus Group's US customer contracts, together with selected corporate and data centre assets, know-how, intellectual property (including the Exodus brand), high quality employee base and other resources required to support these customers and grow the business. The selected assets include 26 of Exodus' 44 operational data centres. These data centres represent approximately 4 million square feet of gross space. Cable & Wireless has selected the centres in order to create, when combined with Cable & Wireless' existing operations, an optimum portfolio of strategically p
