Carl Ichan must be wondering – what does a guy have to do to buy someone these days. The king of distressed buyout failed once again to snap a company he had zeroed in on. He and several other bidders lost out to Savvis Communications, which acquired assets of Cable & Wireless’ U.S. business for about $160 million. According to the terms of the deal, Savvis will pay $155 million in cash, take-on $12.5 million in debt but will get back $52 million in cash sometime after the deal is completed. Savvis is a surprise winner because all this while it seemed Gores Technology Group would walk away with the assets. It is funny in part because Carl was tussling with Gores’ Technology group, and in the end a third party won the bid.
C&W had bought Digital Island and Exodus Communications in separate deals in 2001m but the move was ill-timed it seems. The company ended up closing nearly half the facilities. The company’s US unit, Cable & Wireless America (CWA), filed for Chapter 11 protection Dec. 8 as part of an agreement to sell the hosting unit to Gores, according to this report.
The Washington Post says that the “acquisition will add 1,100 employees to Savvis’s staff of 1,000. The structure of the merged company has not yet been worked out.” Savvis is doing a roll-up play in the web hosting market. Savvis had bought four data centers from Intel in 2002, and last year snapped up assets of WamNet Inc. The company continues to lose money – $102.9 million in first three quarters of its current fiscal year, on sales of $183.5 million.