Message #43 From:
NewsBot Date: October 12, 2006 06:12:00 AM
VSTH News Internap to Acquire VitalStream
ATLANTA--(BUSINESS WIRE)--Internap Network Services Corporation (NASDAQ:
INAP), a leading provider of performance network services over the
Internet, today announced it has reached a definitive agreement to
acquire VitalStream Holdings, Inc. (NASDAQ: VSTH). VitalStream is a
leader in audio and video streaming services and a global provider of
integrated rich media content delivery services that enable businesses
to broadcast digital media content to worldwide audiences via the
Internet.
“The marketplace for content delivery services
is rapidly expanding as the needs for companies to integrate streaming
audio and video into their Web presence become more critical and more
complex. The combination of VitalStream’s
content delivery services and our high performance intelligent route
control solutions positions us to create the market leading platform for
distribution of rich media content and advertising,”
said James P. DeBlasio, chief executive officer of Internap. “We
will offer our combined customers a wider range of complementary
products providing peak website performance, global scalability and new
revenue opportunities including content monetization and on-line
advertising. Together, we expect to become a formidable force in the
rapidly growing streaming media and content delivery market.”
Under the terms of the transaction, Internap will issue approximately
11.9 million shares of common stock in respect of outstanding
VitalStream common shares, which will represent approximately 26% of the
combined company’s shares. This is an exchange
ratio of 0.5132 Internap shares for every VitalStream share. In
addition, Internap will assume VitalStream’s
currently outstanding stock option plans. Based on the closing price of
Internap’s stock on October 11, 2006, the
transaction is valued at an aggregate purchase price of approximately
$217 million. The acquisition is expected to close by the first quarter
of 2007.
“Internap’s
acquisition of VitalStream is a business combination that creates a
scalable public company with complementary product lines and accelerated
growth potential. We believe that this is an exciting value proposition
for our customers including unparalleled distribution, network quality
and customized solutions, as well as a unique alternative for investors,”
said Jack Waterman, chairman and chief executive officer of VitalStream. “The
new Internap will offer turnkey digital media broadcasting solutions for
web users of all sizes. By uniting our two organizations, customers will
have a complete solution to realize the full on-line potential of their
digital assets.”
The transaction is expected to be slightly dilutive to Internap's 2007
EBITDA per share after considering the impact of expected revenue and
cost synergies, but begins to be accretive in 2008 and beyond. The
company also expects the impact of the acquisition will increase its
organic revenue growth rates. Specifically, the companies expect to
capitalize on significant growth opportunities resulting from the
combined companies’ ability to sell Vital
Stream’s services into Internap’s
large and growing customer base, and Internap’s
global presence. The companies also believe there are significant
opportunities for operating cost synergies for calendar year 2007 and
beyond.
Strategic Rationale
The combined company will result in:
Internap holding a market leadership position delivering streaming
media content
Internap’s ability to access the
high-growth streaming media and on-line advertising segments
The strongest, most complete product line in content delivery
solutions, content monetization, and on-line advertising
Significant new organic growth potential coupled with cross selling
opportunities
The combined company will have:
More than 450 total employees
More than 135 quota-carrying salespeople
More than 3000 enterprise customers
The Strongest and Most Complete Product Line
By combining the two companies' product lines, Internap will be able to
meet the needs of customers seeking to both deliver rich media content
to their users and monetize that content. The combination of VitalStream’s
content delivery services, content management tools and particular
expertise in Adobe (formerly Macromedia) Flash technology, with Internap’s
high performance route management network, will enable the new
organization to easily address the needs of enterprises seeking to
deliver large format media files in a streamed environment. The combined
offering will be the strongest and most comprehensive available in the
industry today.
Internap has long served customers across multiple verticals that have
critical needs for high performance network solutions. With the growing
deployment and popularity of audio and video over the Internet, the
combined company is uniquely positioned to address the complexities of
encoding, storing, delivering, managing and monetizing streaming media
content to ensure a compelling user experience for its customers.
Internap has recently announced network upgrades and continued
colocation growth to support these customer requirements and is
recognized as the industry leader in performance network services.
VitalStream is the solution of choice for over 800 enterprise customers
and its development and support capabilities for Adobe Flash and Windows
Media customer implementations set it apart in the industry. By
introducing VitalStream’s capabilities to
Internap’s customer base, the potential
exists to create a new market leader in the content delivery arena.
Significant Growth Opportunities
Internap sees several immediate opportunities for growth:
Product cross-sell. Cross-selling products between the respective
companies' customer bases
Geographic penetration. Leveraging Internap’s
industry leading performance network services and significant network
footprint, in particular, Internap's well established presence in the
United States, Europe and Asia, will address a growing opportunity
across VitalStream’s customer base and
offer a global content delivery solution for Internap’s
customers.
The transaction is expected to close in the first calendar quarter of
2007, and is expected to be tax free to shareholders of both companies
with respect to the stock consideration the shareholders receive. The
transaction is subject to regulatory reviews and approvals, including
the Hart-Scott-Rodino Act; approval by the shareholders of Internap and
VitalStream; and certain other customary closing conditions. Thomas
Weisel Partners LLC acted as financial advisor to Internap. RBC Capital
Markets acted as financial advisor to VitalStream.
Conference Call
Internap and VitalStream will hold a joint conference call for investors
and analysts to discuss the proposed transaction on Thursday, October 12
at 12:00 p.m. Eastern time. Participants may access the call by dialing
866 356 4281; passcode 48824120. International callers may dial 617 597
5395 passcode 48824120. The conference call will be webcast from the
investor relations section of the Internap website at www.internap.com
Additional Information Regarding the
Transaction
The announcement of the transaction is neither a solicitation of a
proxy, an offer to purchase nor a solicitation of an offer to sell
shares of the Company’s common stock.
Internap and VitalStream intend to file with the Securities and Exchange
Commission (“SEC”)
a Joint Proxy Statement/Prospectus on Form S-4. In addition, other
relevant materials in connection with the proposed transaction will be
filed with the SEC. INVESTORS IN INTERNAP AND VITALSTREAM ARE URGED TO
READ CAREFULLY THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT
MATERIAL WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT INTERNAP, VITALSTREAM AND THE TRANSACTION. Any offer
of securities will only be made pursuant to the Joint Proxy
Statement/Prospectus. The documents will be available without charge on
the SEC’s web site at www.sec.gov.
A free copy of the final Joint Proxy Statement/Prospectus may also be
obtained from Internap and VitalStream through their Investor Relations
contacts provided above.
The officers and directors of VitalStream may have interests in the
proposed acquisition, some of which may differ from, or may be in
addition to, those of the stockholders of VitalStream generally. A
description of the interests that the officers and directors of the
companies have in the proposed transaction will be available in the
Joint Proxy Statement/Prospectus.
In addition, Internap and VitalStream, their respective officers,
directors and certain of their management and employees may be deemed to
be participants in the solicitation of proxies from the stockholders of
Internap and VitalStream in favor of the acquisition. Information about
the officers and directors of Internap and their ownership of Internap
securities is set forth in the proxy statement for Internap’s
2006 Annual Meeting of Stockholders filed with the SEC on April 26,
2006. Information about the officers and directors of VitalStream and
their ownership of VitalStream securities is set forth in the proxy
statement for VitalStream’s 2006 Annual
Meeting of Stockholders filed with the SEC on June 20, 2006. Investors
may obtain more detailed information concerning the participants by
reading the Joint Proxy Statement/Prospectus when it is filed with the
SEC.
Certain information included in this press release constitutes
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements, other than statements of
historical facts, including, among others, statements regarding the
combined company, the effects of the transaction, the dilutive and
accretive effects of the transaction in 2007, 2008 and beyond, synergies
from the transaction and growth opportunities. Those statements include
statements regarding the intent, belief or current expectations of
Internap, the combined company and members of our management team, as
well as the assumptions on which such statements are based, and equally
are identified by the use of words such as “may,”“will,”“seeks,”“anticipates,”“believes,”“estimates,”“expects,”“projects,”“forecasts,”“plans,”“intends,”“should” or
similar expressions. Forward-looking statements are not guarantees of
future performance and involve risks and uncertainties that actual
results may differ materially from those contemplated by forward-looking
statements. The transaction and the achievement of any anticipated
benefits from the transaction are subject to significant risks and
uncertainties. Many important factors that may affect Internap’s
and the combined company’s business, results
of operations and financial condition include, but are not limited to,
our ability to sustain profitability; the ability to successfully
integrate the operations of Internap and VitalStream; our ability to
compete against existing and future competitors; pricing pressures; our
ability to respond successfully to the evolution of the high performance
Internet connectivity and services industry; our ability to respond
successfully to technological change; our ability to deploy new access
points in a cost-efficient manner; the availability of services from
Internet network service providers or network service providers
providing network access loops and local loops on favorable terms or at
all; failure of third party suppliers to deliver their products and
services on favorable terms or at all; failures in our network
operations centers, network access points or computer systems;
fluctuations in our operating results; our ability to secure adequate
funding; the incurrence of additional restructuring charges; our ability
to operate in light of restrictions in our credit facility, including
our ability to maintain ratios set forth in the credit facility; our
ability to attract and retain qualified personnel; our ability to
protect ourselves and our customers from security breaches; our ability
to protect our intellectual property; our ability to successfully
complete future acquisitions; risks associated with international
operations; claims relating to intellectual property rights; government
regulation of the Internet; the dilutive effects of our stock price due
to outstanding stock options and warrants; future sales of stock;
effects of natural disasters or terrorist activity; and volatility of
our stock price.
Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form
10-Q, recent Current Reports on Form 8-K and other Securities and
Exchange Commission filings discuss the foregoing risks as well as other
important risk factors that could contribute to such differences or
otherwise affect our business, results of operations and financial
condition. The forward-looking statements in this release and the
related conference call for analysts and investors speak only as of the
date they are made. We undertake no obligation to revise or update
publicly any forward-looking statement for any reason.
Internap is a market leader of intelligent route control solutions that
bring reliability, performance and security to the Internet. The
company's patented and patent-pending technologies address the inherent
weaknesses of the Internet, enabling enterprises to take full advantage
of the benefits of deploying business-critical applications such as
e-commerce, VoIP, and audio/video across IP networks. Internap currently
serves more than 2,100 customers throughout North America, Europe, Asia
and Australia. For more information, please visit the company website at www.internap.com.
VitalStream Forward Looking Statements
This news release contains forward-looking statements made by
VitalStream in reliance upon the safe harbor provisions of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. All statements, other than statements of historical facts,
including, among others, statements regarding the consummation of the
transaction, the combined company, synergies from the transaction and
growth opportunities. Those statements include statements regarding the
intent, belief or current expectations of VitalStream, as well as the
assumptions on which such statements are based, and equally are
identified by the use of words such as “may,”“will,”“seeks,”“anticipates,”“believes,”“estimates,”“expects,”“projects,”“forecasts,”“plans,”“intends,”“should” or
similar expressions. The following factors, among others, could cause
actual results to differ materially from those described in any
forward-looking statements: the risk that the transaction may not be
consummated for various reasons, including failure to obtain regulatory
approval and failure to obtain shareholder approval; the risk that
anticipated operational synergies may not be re
