WorldCom’s acquisition of controlling interest in Digex assures l...
WorldCom’s acquisition of controlling interest in Digex assures latter will be “leader in managed hosting services to enterprise customers,” Lehman Bros. said Fri. Research report by analyst Harry Blount said he was reassured by WorldCom announcement to analysts that…
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it would fund Digex through 2002 and commit up to $500 million in sales of Digex services over 3 years. Report said WorldCom’s funding appeared to be under terms that “will be significantly more attractive than could be achieved by Digex alone in the capital markets.” Lehman maintained strong buy for Digex. WorldCom on Thurs. proposed settlement designed to ease concerns of Digex’s minority shareholders about WorldCom’s acquisition and ward off suit they had filed. WorldCom plans to acquire Digex control through merger with Intermedia, which then will be spun off under consent decree with Dept. of Justice. Settlement with shareholders calls for paying more than $180 million in cash and stock in return for resolution of claims in lawsuit. Among other things, settlement would reduce exchange ratio of WorldCom-Intermedia shares to one WorldCom share for each Intermedia share. Current ratio calls for 1.18 WorldCom shares for one Intermedia. Digex shareholders also would get settlement fund of $165 million in WorldCom stock plus 2nd fund of $15 million to cover expenses incurred by Digex in connection with settlement.