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AtomFilms to Merge with Shockwave.com

In a move aimed at speeding the road to profitability, Shockwave.com and AtomFilms have signed a definitive merger agreement.

Under the terms of the definitive merger agreement unanimously approved by each company's board of directors, shockwave.com will acquire AtomFilms in a stock-for-stock deal. After the closing, shareholders of AtomFilms will own thirty percent of the consolidated company.

"As we look at these companies and the assets that they have, there is almost no overlap and tremendous synergies," said Rob Burgess, chairman and CEO of Macromedia and chairman of shockwave.com. "By combining these companies we feel that we have the greatest breadth of content and we have a tremendous scaling sources of revenue."

The merger will combine both company's assets, resulting in an enterprise that will include strengths from each of the companies, such as Atom's content with shockwave's traffic.

The companies hope that this move will speed the road to profitability.

"In the current market environment the key (to profitability) is that it must be faster, and we are very well aware of that," said Mika Salmi, founder and CEO of AtomFilms. "I wouldn't say it's easy to do, but it's much easier to do as a combined entity."

The newly formed company hopes to be profitable by early next year.

As of yet, the newly formed company has not selected a new name, but will likely maintain each of the brands because of their strong brand equity.

The new company will be based in San Francisco. The result of the consolidation will be a net loss of 100 jobs across both offices, approximately one-third of the companies' combined workforce.

Rob Burgess, chairman and CEO of Macromedia and chairman of shockwave.com will become chairman of the new company. Mika Salmi, the founder and CEO of AtomFilms, will be CEO. Matt Hulett, chief marketing and online officer at AtomFilms, will become president.

Shockwave.com CEO Lawrence Levy will serve in a strategic advisory role through the transition.

The deal is expected to close within the first calendar quarter of 2001. The companies are awaiting Hart-Scott-Rodino approval prior to closing.