EarthLink, MindSpring set breakup fee
yahoo.cnet.com
EarthLink,
MindSpring set
breakup fee
By Bloomberg News
Special to CNET News.com
September 30, 1999, 3:45 p.m. PT
ATLANTA--EarthLink Network and
MindSpring Enterprises agreed to
pay a $70 million breakup fee if either
company cancels their proposed
merger, which will create the
second-largest U.S. Internet access
provider.
The transaction, announced last week, is
worth about $1.4 billion, based on
EarthLink's market value. The fee was
disclosed in a filing with the U.S.
Securities and Exchange Commission.
Breakup fees are often contained in
merger and acquisition agreements to
protect shareholders against any drop in
the value of their securities if the
transaction is terminated. They also
serve to prevent third parties from
bidding on the companies.
Once the merger is complete, the
company should have about 2.8 million
subscribers, compared with more than
20 million for America Online, the
world's largest Internet service. The
transaction is expected to be completed
in the first quarter of 2000.
MindSpring shareholders will get one
share in the new company, to be called
EarthLink, for each share held. EarthLink
investors will get 1.615 shares for each
share they own.
Pasadena, California-based EarthLink
fell 0.88 to 42.94, while Atlanta-based
MindSpring dropped 0.19 to 27.69. |
