Cable and Wireless Buys Exodus

The international telco looks to expand its customer base and add data centers by picking up the bankrupt hosting firm.

by Thor Olavsrud of internetnews.com [December 3, 2001]

Cable and Wireless (NYSE:CWP) moved to significantly expand its customer base and Web hosting operations with a deal to acquire bankrupt Web hosting firm Exodus Communications for $850 million in cash.

The deal would put 3,500 customers, 30 of Exodus' 48 data centers, and Exodus' employees in C&W's camp, and would also give the international telecommunications firm the right to use the Exodus brand name. The deal will give C&W 26 new data centers in the U.S., two in London, one in Tokyo and another in Frankfurt. Those are in addition to the data centers it picked up when it acquired Digital Island for $340 million in May.

The company said it expects to invest another $250 million in Exodus to take it through to break-even point in its cash flow. Exodus has estimated sales of $1.3 billion this year, though its debt has ballooned to between $3 billion and $4.4 billion.

C&W said it anticipates completing the transaction by February, though it must work within the confines of the bankruptcy court proceedings and satisfy regulators.

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