One week to the day after IBM Corp. nabbed Mainspring, Compaq Computer Corp.
Thursday snapped up Reston, Va.-based Proxicom Inc. in a cash deal valued at
about $266 million. Houston’s Compaq doled out $5.75 per share in the deal
and will commence a tender offer for all outstanding Proxicom shares.
Peter Blackmore, executive vice president, Worldwide Sales and Services of
Compaq, said the acquisition would give Compaq’s $7 billion dollar global
services unit a lift.
“The addition of Proxicom will strengthen Compaq’s value proposition to
customers by supporting our already significant
presence in telecommunications and financial services markets, and extending
our capabilities in markets including retail, automotive, manufacturing, and
media and entertainment,” said Blackmore.
Compaq’s purchase comes as no surprise; e-consulting is a sector that was
once ripe with possibilities and is now ripe for the picking.
Over the last several months, e-consultants AGENCY.COM, marchFIRST, Viant, Scient, Modem Media and Organic
have either filed for Chapter 11 bankruptcy, announced layoffs, or issued
quarterly earnings warnings.
Indeed, a year ago most of its members were valued at $1 billion or more,
according to Chris Nerney, executive editor of the IT Management
Channel at internet.com Corp. Today the largest market cap in the Internet
Consultants/Designers sector is a mere $350 million — and shrinking, Nerney
IBM’s purchase of Mainspring for $80 million in stock came more than a month
after a similar tech-giant-buys-consulting-practice deal in which software
maker Novell Inc. scooped up Cambridge Technologies Inc. for $255 million in
Cambridge laid off almost 700 people, or 17 percent of its staff, before
being picked up by Novell. Mainspring itself announced an unspecified number
of layoffs in February. In a gloomy quarterly warning,
Proxicom laid off 227 people, or 19 percent of its workforce, on March 23.
In addressing the cost-cutting measures, Proxicom Founder, Chairman and
Chief Executive Officer Raul Fernandez said then that “the U.S. economic
uncertainty and recent deterioration in the European market caused a number
of clients to postpone decisions, delay delivery dates or revisit their
spending commitments for critical projects.”
Proxicom, in a continuation of the get-bought-or-go-under pattern, will be a
wholly-owned subsidiary of Compaq reporting to Jeff Lynn, vice president and
general manager, Compaq Global Services. The unit will retain its name.
Any Proxicom shares not acquired by Compaq in the tender offer will be
acquired in a second step merger. The board of directors of each company has
approved the acquisition and two of Proxicom’s largest shareholders,
Fernandez and General Atlantic Partners, have agreed to tender their shares
into the offer and otherwise support the transaction. The acquisition will
be neutral to earnings in the second half of 2001 and accretive in 2002.
Shares of Proxicom
closed up 43 cents, or 11 percent, to
$4.33 ahead of the announcement. Compaq
declined by 79 cents, or 4.4 percent, to close at $17.
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