PSINet Inc. Wednesday procured
international e-commerce solutions provider Metamor Worldwide Inc. for $1.9 billion
in stock.
PSINet (PSIX)
plans to utilize the acquisition as a catalyst to construct a global
business infrastructure equipped to provide web design services, managed
Web hosting and applications outsourcing.
The deal marks PSINet’s first venture into the application service
provider marketplace. Given PSINet’s aggressive growth by acquisition into
the global Web hosting arena, the Metamor (MMWW)
buyout may be the first of many deals to come.
The acquisition also gives PSINet a controlling interest in Metamor’s
publicly traded e-commerce subsidiary Xpedior Inc.
Xpedior (XPDR)
provides comprehensive e-business solutions worldwide for Fortune 1000
companies and government institutions and will work to supply PSINet’s
90,000 worldwide clients with legacy integration and Web development services.
Xpedior remains an independent business entity with PSINet taking up two seats on its board of directors through its 80 percent stock ownership of the firm.
William Schrader, PSINet chairman and chief executive officer said he
supported Xpedior’s independence because the firm can provide essential
backward integration services to PSINet’s clients, of which only 5,000
currently maintain a backoffice integrated Web presence for e-commerce.
“When customers asked us to migrate legacy applications into a Web
environment, we had to send their business elsewhere,” Schrader said.
“Oftentimes we never saw that customer again. Xpedior does that for us now.
It’s a great way to get our customers to stick with us.”
“E-commerce is an important component of our Internet strategy,” Schrader
said. “This deal is a real no-brainer. The acquisition of Metamor Worldwide
furthers our plans to move into the applications outsourcing arena.”
Metamor has clients ranging from Fortune 1000 to middle market businesses.
It offers high-speed services including e-commerce solutions, package
software implementation and integration, custom application development and
application outsourcing, in addition to Web hosting and network integration.
PSINet expects Metamor to reap the benefits of cross-selling its services
with existing clients. Over the next three years PSINet projects that
Metamor should produce about $500 million in sales.
The deal also provides PSINet with an expert staff to help it break into ASP and
integration services. Compared to the 450 Exodus Communication, Inc. (EXDS)
worldwide IT specialists, PSINet maintains numeric superiority over the
competition by acquiring 5,400 experts worldwide.
The transaction is structured as a tax-free reorganization consisting of
just under 40 million shares of PSINet common stock. Each share of Metamor
will be exchanged for .9 shares of PSINet common stock.
Completion of the transaction is subject to shareholder and regulatory
approvals. The transaction is scheduled for completion by the middle of the
year.
