Intermedia Shares Fall After Ruling on WorldCom Combination
Wilmington, Delaware, Dec. 14 (Bloomberg) -- Intermedia Communications Inc. shares fell as much as 31 percent after a judge ruled that WorldCom Inc. may face as much as $2.5 billion in damage claims if it completes a plan to buy Intermedia.
Shares of Intermedia, a provider of telephone and Internet services to businesses, fell $3.56, or 29 percent, to $8.69 in early trading. They had fallen 46 percent since the offer by WorldCom, the No. 2 U.S. long-distance phone company, was announced Sept. 5.
Delaware Chancery Court Judge William B. Chandler III said Intermedia executives serving on the board of Digex Inc., a Web site-managing company Intermedia controls, may have violated their legal duties to shareholders by waiving anti-takeover defenses to smooth the path for WorldCom's acquisition. He refused to block WorldCom's bid for Intermedia.
Some Digex shareholders favored a competing offer from Exodus Communications Inc. Shareholders will seek $2.5 billion in damages from WorldCom if it proceeds with the bid for Intermedia, said Stuart Grant, a Wilmington, Delaware-based attorney representing Digex shareholders. That's the difference in value between Digex's current share price and the offer from Exodus.
Digex shareholders have demonstrated ``a likelihood of success'' in proving Intermedia officials serving as Digex directors violated legal duties to shareholders, Chandler said. Digex shareholders may be entitled to a ``range of equitable remedies, including monetary remedies,'' he said.
Shares of Beltsville, Maryland-based Digex, which helps manage Web sites for companies that include Sony Corp. and Ford Motor Co., fell 75 cents to $28.50. Shares of Clinton, Mississippi- based WorldCom fell 44 cents to $17.75. Intermedia is based in Tampa, Florida.
Dec/14/2000 10:56 ET
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