SAVVIS Communications Corporation, a managed IP services provider, and WAM!NET Inc., a provider of content management and delivery services, have announced that SAVVIS has agreed to purchase WAM!NET Inc.'s commercial business.
Under the deal, SAVVIS will acquire certain assets and customers of WAM!NET's commercial business, in return for $3 million paid at closing, and additional consideration to be paid starting in the second quarter of 2004 based on revenue performance from the WAM!NET business at that time. As the result of infrastructure operating cost synergies expected to be generated by this combination, SAVVIS maintains its projection to become operating cash flow positive in the fourth quarter of 2003, and will have combined annualized revenues of nearly $275 million. The deal is scheduled to close on WAM!NET's US commercial assets on August 1st and on WAM!NET's European commercial assets shortly thereafter.
SAVVIS' purchase price for the assets and customers of WAM!NET's commercial business includes $3 million in cash on the closing date, with the remaining purchase price determined in April 2004 based on the value of WAM!NET's annualized revenues at that time. In 2002, WAM!NET's commercial business revenues were slightly less than $30 million. This amount does not include revenue derived from its Government Services or 4-Sight businesses, which SAVVIS is not acquiring. If annualized revenues are at the 2002 level in April 2004, the purchase price will be approximately $16 million.