RealTime IT News

Court Approves Savvis Bid for Bankrupt C&W

By Sean Michael Kerner

How the mighty have fallen. The acquirer gets acquired.

Once mighty Cable and Wireless America, itself expanded as the result of the acquisition of bankrupt hosting companies like Digital Island and Exodus Communications has now had its assets acquired by Savvis Communications .

The Herndon, Va.-based Savvis announced Friday that it has won the right to acquire substantially all of the assets of Cable & Wireless USA (CWA) and Cable & Wireless Internet Services for $155 million in cash and assumed liabilities of approximately $12.5 million.

Savvis will acquire substantially all of CWA's assets under the proposed terms of sale. CWA's Tier One IP Network footprint encompasses 27 percent of all Internet routes and serves more than 2,000 enterprise customers. CWA's hosting business comprises more than 1,000 enterprise customers and 15 data centers.

In total, according to a statement issued by Savvis, the acquired assets add over 5,000 customers and will give the combined company projected annualized revenues of approximately $700 million by year-end 2004.

Cable & Wireless began withdrawing from the U.S. market in November of 2002. By December 2003, C&W America (CWA) filed for Chapter 11 bankruptcy protection.

At that time, Gores Technology group agreed to purchase CWA's hosting and Internet protocol assets for $125 million. The initial offer by Gores was not finalized at that time in order to comply with U.S law.

"In compliance with Section 363 of the Bankruptcy Code, Savvis was one of seven bidders in a lively, court-supervised auction and was selected because it submitted the highest and best bid," John S. Dubel, CWA's chief executive officer told internetnews.com via e-mail.

The bankrupt CWA, despite its money losing status, still remains one of the largest hosting operations in the world with over 760,000 hostnames, according to a recent Netcraft survey. Some of its notable hosting customers include Starbucks, Reebok and the popular Slashdot.org.

In 2003, Savvis was ranked number three in IP VPN market share, trailing only AT&T and MCI/WorldCom.