WorldCom Corp. reportedly is in talks on a transaction that will allow it to take a controlling stake in web hosting company Digex.
WorldCom is finalizing a deal to buy telecommunications provider, Intermedia Communications Inc., for $39 a share in cash and stock, or about $3 billion, the Wall Street Journal reported. Intermedia holds a 54-percent stake in Digex, which has been for sale since July.
However, Digex’s board apparently hasn’t blessed the transaction yet. If WorldCom hopes to eventually merge Digex with its own web hosting business, the telecommunications giant may need to make a separate bid for Digex.
WorldCom is in the middle of a campaign to spend $1 billion to develop 120 Web-hosting centers by year end and install switches that transport voice via the Internet to help customers save on access fees. If WorldCom succeeds in taking over Digex, it will have beat out rival bids from Global Crossing Ltd. and Exodus Communications.
The acquisition of Intermedia would be the first major deal for WorldCom since its blockbuster acquisition of Sprint fell apart due to regulatory opposition.