Update: WorldCom Works Out Deal With Digex
Updated from 3:12 p.m. ET
WorldCom
( WCOM) and
Intermedia Communications
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plan to revise the terms of their merger agreement to satisfy shareholders at
Digex
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, a Web hosting firm controlled by Intermedia.
WorldCom's planned acquisition of Intermedia would give the telecom company a 55% equity stake and 94% voting stake in Digex. WorldCom received
Federal Communications Commission
approval for the deal last month.
According to the new terms of the stock swap, WorldCom will exchange one share for each share of Intermedia. WorldCom previously offered 1.2 shares for each Intermedia share. WorldCom and Digex agreed on a series of commercial arrangements that will offer WorldCom's customers favorable access to Digex's managed Web and application hosting services.
Additionally, WorldCom will create a settlement fund consisting of $165 million of WorldCom stock, for Digex shareholders other than Intermedia, as well as for legal fees. WorldCom will also establish a fund of up to $15 million in cash to cover expenses Digex incurred.
Digex minority shareholders recently sued five Digex company directors, WorldCom and Intermedia in an effort to block the merger. The shareholders claimed that instead of offering Digex as a merger partner to WorldCom, which wanted its Web-hosting assets last summer, Intermedia stepped in instead to give WorldCom control of Digex at a lower cost.
