National Internet service providers EarthLink(Nasdaq: ELNK) and MindSpring (Nasdaq: MSPG) announced a merger today that would create the nation’s second-largest ISP and “offer a clear alternative to AOL.”
Slated to be called EarthLink and be traded on the Nasdaq exchange as “ELNK,” the new company would have a combined three million customers, a market capitalization of $3 billion (US$) and annualized revenues of nearly $650 million.
The stock swap deal is valued at $1.3 billion. Under the terms of the proposal, MindSpring shareholders will receive one share of the new company’s stock for each MindSpring share and EarthLink shareholders will receive 1.615 shares of the new company’s stock for each EarthLink share they possess. The merger is subject to regulatory and shareholder approval.
“I believe this marriage of equals will position the new company as the clear leader in the Internet access arena,” said EarthLink CEO Charles “Garry” Betty. “By leveraging the synergies between our operations, marketing channels and member service philosophies, we have built a solid platform to service our current members, and, at the same time, accelerate our aggressive growth strategy.”
Betty would retain his post with the new company.
Attraction Was Mutual
Both companies’ founders — MindSpring’s Charles Brewer and EarthLink’s Sky Dayton — built their companies from the ground up after becoming frustrated by early attempts to log onto the Internet.
Dayton said that the two founders “were among the few visionaries who saw the potential in the Internet to redefine the way people communicate.” Hyperbole aside, both companies have built strong networks that will become even stronger when joined together.
Consistently ranked in the top three in overall customer satisfaction among national ISPs, the two companies said that the newly-formed company would adopt MindSpring’s core values and beliefs as its guiding principles.
The new company would set up its base at MindSpring’s current headquarters in Atlanta. It would employ nearly 4,000 people in offices in Atlanta, Seattle, Dallas, Phoenix, San Jose and Sacramento. Additional offices would be located in Pasadena, California and Harrisburg, Pennsylvania.
EarthLink’s business alliance with telecommunications giant Sprint will stay intact. The companies said that the merger is expected to gain approval by the first quarter of 2000.