Global Crossing Ends Talks With Exodus on Unit Sale (Update6)
7/17/0 13:6 (New York)
Global Crossing Ends Talks With Exodus on Unit Sale (Update6)
(Adds decline in Global Crossing, Exodus shares.)
Santa Clara, California, July 17 (Bloomberg) -- Global
Crossing Ltd. ended talks to sell its GlobalCenter Web-hosting
unit because the $6.6 billion in stock offered by Exodus
Communications Inc. was too low, people familiar with the
discussions said.
Shares of Exodus, the largest company that manages other
businesses' Web sites, had risen about 50 percent since the Wall
Street Journal reported Wednesday that the companies were in
talks. In midday trading, Exodus shares fell 3 1/4 to 52 1/16.
Global Crossing fell 1 11/16 to 31 5/16.
On Friday, Exodus cut its offer to about 120 million shares,
or an 18 percent stake, the people said. It had offered 150
million, they said, valuing the unit about $8 billion after the
share price rise. Global Crossing objected, and the talks broke
off and aren't likely to be resumed, they said. Global Crossing
now plans to sell Global Center shares in an initial public
offering as early as next month, the people said.
``There's a buoyant market for this kind of property and it
shouldn't be tough '' to find buyers, said Tan Kee Hian, a vice
president at AT Kearney Ltd.
Global Crossing and Exodus declined to comment.
No Comment
On Wednesday afternoon, Leo Hindery, chief executive of
Global Crossing, which is building a worldwide phone and data
network, declined to comment on the report his company was in
talks to sell GlobalCenter to Exodus.
``We never comment on speculation and rumors,'' he said in an
interview. ``It's just unfair to the shareholders.''
Exodus, based in Santa-Clara, California, sells Web-hosting
services to more than 2,000 businesses. It owns buildings that
house the servers 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 have increased usage
of Exodus's facilities, 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.
$1.65 Billion Contract
At the time the talks to sell GlobalCenter foundered, the two
companies had also agreed on a 10-year, $1.65 billion contract for
Global Crossing to sell transmission on its fiber-optic network to
Exodus and creation of a 50-50-owned unit that would have combined
the two companies' Web-hosting services in Asia, the people said.
Exodus lacks its own network to connect Internet users and
clients with its data centers. The contract, expanding an existing
sales contract between the two companies, would have covered most
of Exodus's network needs, the people said.
Exodus said in August a year ago it would buy $105 million in
telecommunications services from Global Crossing, connecting its
data centers in Europe, Japan and the U.S.
On Wednesday, Global Crossing said it will sell about 1
million local phone lines for $3.65 billion to Citizens
Communications Co., to cut debt and to invest in network
expansion, sales, new products and its GlobalCenter unit.
On Thursday, Asia Global Crossing Ltd., a joint venture of
Global Crossing Ltd., Microsoft Corp., and Softbank Corp., said in
a company filing it will offer 53 million shares to the public in
an offering worth as much as $848 million.
Asia IPO
Asia Global Crossing, which is building an Asian undersea
cable network, will offer Class A common stock at $14 to $16 a
share, according to a filing with the U.S. Securities and Exchange
Commission.
About $500 million of the proceeds from the stock sale will
go toward building the company's network, $200 million for
investing in related telecommunications and Internet companies,
and $9.4 million to pay outstanding debts, the filing said.
Bermuda-based Asia Global is building an 11,000-mile cable
network linking Japan, Hong Kong, China, South Korea, Malaysia,
and the Philippines.
--George Stein in New York (212) 893-3934, (917) 545-9850,
ghstein@bloomberg.net through the Princeton newsroom with
reporting by Anjana Menon in the London newsroom (44) 020-7673-
2508, or amenon@bloomberg.net /shw/jkr/sr/jdh
Story illustration: For a graph comparing Exodus and Global
Crossing shares, {EXDS US <Equity> GLBX US <Equity> HSN <GO>}.
See {MA <GO>} for a data base on mergers and acquisitions and
{TOP DEAL <GO>} for a page of top stories about mergers,
acquisitions, initial public offerings and debt issues. |
