USWeb/CKS + Whittman-Hart

Several years ago, getting on the Web was fairly simple. Just having a
static Web site was impressive.

Now, a Web strategy is becoming essential for many companies. What’s more,
the Web needs to become completely integrated — internally and externally
(such as with suppliers, distributors and strategic partners).

One of the pioneering Web consulting firms is USWeb/CKS (USWB)
. Like all good consulting firms, the company has grown via
acquisition (about 40 over the life of the company).

Yesterday the company announced a mega merger with
Whittman-Hart (WHIT)
. However, Wall Street was disappointed. In fact, several analysts
downgraded Whittman-Hart’s shares. USWeb/CKS was down 7-1/16 to 43-13/16
and Whittman-Hart was down 24-3/4 to 54-1/2.

In the deal, USWeb/CKS will receive 86 Whittman-Hart shares for every 100
shares of USWeb/CKS. Basically, it will be a merger of equals.

However, I think the sell-off could be an opportunity, especially for the
shares of USWeb/CKS.

Whittman-Hart is a traditional company, focusing on back-office operations
(like billing). The company’s clients are mostly medium size or divisions
of big companies.

As for USWeb, it caters to the Web needs of the Fortune 1000. Clients
include Harley-Davidson, Levi Strauss, and Apple Computer

The goal of the merger is to provide full-service to clients — for any
client, whether small, medium or large. In all, the new company will have
8,000 people (there will also be a new name to the company), about $1
billion in annual sales, $300 million in cash and zero debt.

Perhaps the big concern is integration. This is a large transaction,
involving different systems and cultures. But, the fact remains that
USWeb/CKS has been particularly strong with M&A.

While other Net consulting companies have been strong (like Razorfish and
Scient), USWeb/CKS has not been a beneficiary. Yet, the company is
positioning itself to be a powerhouse in the Web consulting business.
Eventually, as the company continues to perform, investors should

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