GBLX will go up........Exodus Nears $6.5 Bln Pact for Global Crossing Unit
(Update1)
By George Stein
Santa Clara, California, Sept. 28 (Bloomberg) -- Exodus Communications Inc.
revived a $6.5 billion bid for Global Crossing Ltd.'s GlobalCenter Inc. after
WorldCom Inc. snatched away a rival Web-hosting company, people familiar with
the situation said.
The GlobalCenter transaction, which could be announced today after the Exodus
and Global Crossing boards vote, will create the world's largest Web-hosting
company and allow Exodus to plug into Global Crossing's worldwide network
through a 10-year, $4 billion contract, the people said.
The Exodus network contract will match access that the WorldCom system will
provide Digex Inc., the people said. The $6 billion WorldCom-Digex transaction,
announced on Sept. 5, left Exodus as the only major Web-hosting company
without a partner that owns a global voice and data network, exposing it to price
increases. Exodus and Global Crossing both bid for Digex.
``Without Digex being available, Exodus probably said we should rethink our
strategy and Global Crossing is a part of that,'' said Tom Burnett, president of
Merger Insight, which tracks mergers and acquisitions.
In European trading, Global Crossing shares rose as much as 9 euros, or 29
percent, to 40 euros. Exodus shares fell as much as 4.3 euros, or 7 percent, to
56.7 euros.
The Exodus-Global Crossing talks were reported earlier by Dow Jones. The
companies declined to comment.
``At this point, it's a rumor and it's our company policy not to comment on
rumors or speculation,'' said Exodus Communications spokeswoman Maureen
O'Connell. Global Crossing spokesman George Sard said, ``I have no comment.''
Largest Shareholder
Global Crossing would become Exodus's largest shareholder with a 20 percent
stake and gain a seat on the Exodus board, the people said.
The network contract requires Exodus to use the Global Crossing network for at
least half of all its needs outside of Asia, where it's to use the network for at least
two thirds of its requirements, the people said.
Exodus and Asia Global Crossing Ltd., a joint venture owned by Global Crossing,
Microsoft Corp. and Softbank Corp., plan to set up a joint venture, the people
said. Asia Global Crossing is planning an initial share sale next week.
In July, Global Crossing ended talks to sell its GlobalCenter because the $6.6
billion in stock Exodus offered was too low, people familiar with the discussions
said at the time.
Global Crossing then decided to proceed with plans for an initial public offering of
GlobalCenter tracking shares, detouring at the beginning of the month for its
unsuccessful bid for Digex.
Exodus, based in Santa Clara, California, sells Web-hosting services to more
than 2,000 businesses. It owns buildings that house the servers -- the powerful
computers that run Web sites -- alleviating companies of the responsibility of
making sure their sites don't go down and owning the hardware.
Adding Global Center's customers would increase usage of Exodus's data
centers, boosting profits as well as revenue.
Global Crossing got into the Web-hosting business when it acquired Frontier
Corp. for $10.4 billion in September.
It has since faced tougher competition and higher capital costs. Web hosting
requires secure, reliable data centers to support Web sites increasingly used for
complex, confidential transactions and record-keeping.
Global Crossing will be able to avoid $1 billion in outlays to build data centers
around the world over the next few years by selling GlobalCenter to Exodus, the
people said. |
