Compaq and CMGI Form Strategic Internet Partnership; CMGI Acquires AltaVista
June 29, 1999 09:27 AM
HOUSTON and ANDOVER, Mass.--(BUSINESS WIRE)--June 29, 1999--
Team to Deliver End-to-End Technologies And Enterprise Solutions;
Partnership to Define Future of Consumer Internet PC Market
Editor's Summary:
-- CMGI takes majority stake in AltaVista; Compaq to be CMGI's
largest outside shareholder
-- CMGI's Internet leadership and resources to accelerate
AltaVista's move to world-leading portal network
-- Compaq named a premier IT partner to CMGI; CMGI to be a premier
Internet technology and solutions supplier to Compaq
-- CMGI to collaborate with Compaq's world-class research labs and
business groups to develop and rapidly deploy next-generation
Internet technologies
Compaq CPQ , a top global supplier of information technology systems and solutions and worldwide consumer PC leader, and CMGI CMGI , the leading diversified Internet operating company, today announced a comprehensive strategic partnership that will enable both companies to aggressively pursue Internet-related business and market opportunities.
The strategic partnership is aimed at providing the best Internet services and solutions to both businesses and consumers. The two companies will drive the Internet PC market by combining Compaq's consumer PC leadership with CMGI's network of leading Internet destinations and enabling technologies. CMGI will acquire control of Compaq's AltaVista business and its related properties (Shopping.com and Zip2) and will integrate the popular AltaVista search engine into its network of 40 leading Internet operating companies to deliver a superior online experience to Internet users both at home and at work.
"Our partnership will define and lead the consumer and enterprise market, from PC to web, by combining Compaq's consumer Internet PC, commercial computing and infrastructure leadership, global reach and worldwide customer base with CMGI's network of leading Internet technologies and destinations," said Dave Wetherell, CMGI Chairman and CEO.
"CMGI has established itself as a clear leader in the Internet economy," added Benjamin M. Rosen, Compaq Chairman and acting CEO. "And as CMGI's largest outside shareholder and its principal strategic partner, we look forward to mutually driving future Internet opportunities for the benefit of the Internet marketplace, our respective shareholders, customers and employees."
Under the terms of a definitive agreement, Compaq will transfer 83.0 percent equity ownership in the AltaVista business to CMGI. Compaq will retain 17.0 percent equity ownership in the AltaVista business and hold a Board seat. In return, Compaq will receive 19.0 million CMGI common shares and CMGI preferred shares equivalent to 1.8 million CMGI common shares, which combined, would represent a 16.4 percent fully diluted equity stake in CMGI. In addition, CMGI will issue a $220 million three-year note to Compaq, bringing total consideration for CMGI's 83 percent ownership in the AltaVista business to approximately $2.3 billion, implying a total value of $2.7 billion for AltaVista. Compaq will also take a seat on the CMGI Board of Directors and plans to announce the appointment to this new position in the coming months. The agreement, subject to normal regulatory approvals, is binding on both parties and does not require shareholder approval for the closing.
Global Business and Customer Benefits
The partnership between CMGI and Compaq will expand the range of both companies' Internet business capabilities.
Under the agreement, CMGI designates Compaq as its strategic IT partner, enabling CMGI, its Internet companies and their customers to benefit from Compaq's global leadership in consumer products, PC products, and enterprise-class systems, solutions and services.
Compaq plans to integrate the diverse Internet capabilities of CMGI's pure-play network of 40 Internet companies into its consumer Presario(R) Internet PCs, commercial PC and enterprise-class solutions offerings. This integration includes Web browser and keyboard access to the AltaVista Network and other CMGI Web services. Importantly, the alliance will enable Compaq and CMGI to offer Compaq's enterprise customers an array of business-to-business and business-to-consumer services to create customized vertical portals along with other comprehensive Internet solutions.
With Compaq as its strategic IT partner, CMGI's network of businesses will be able to take advantage of Compaq's NonStop(R) eBusiness solutions. This will ensure that the IT systems fundamental to their success will maintain uninterrupted operations with complete data integrity and unlimited scalability, supporting continual growth and ease-of-management.
CMGI will also collaborate with Compaq's world-class research labs and business groups to develop innovative, high-value Internet technologies and next-generation Internet appliances, and will foster business opportunities to exploit them.
Building World-leading Network with AltaVista
CMGI, Compaq and the AltaVista management team -- headed by Rod Schrock -- will work together to establish AltaVista as one of the world's leading Internet networks. AltaVista will integrate services from CMGI Internet companies to create a premier Internet network for both on-line consumers and Web-based businesses.
Yesterday, AltaVista announced several new services that form the foundation of a premier media and commerce network. These include an updated search site, the world's first microportal service, 42 local community portal partners, and redefining Shopping.com as the ultra-satisfying place to shop.
"We believe in the power of the Internet and in the power of leading portals to capture and retain users," added Wetherell. "The integration of AltaVista services with CMGI's extensive network of best-of-breed Internet operating companies will create a formidable network. We see enormous opportunity ahead as we execute on the dynamic potential of our synergies."
"CMGI's Internet leadership will greatly accelerate the AltaVista strategy announced just yesterday," said Rod Schrock, president and CEO of AltaVista Company. "By combining AltaVista services with CMGI's extensive network of community, infrastructure and e-commerce Internet companies, there is no limit to our long term potential."
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