Jan. 17, 2002 -- A U.S. Bankruptcy Court has approved the sale of the assets of Exodus Communications to Digital Island, the U.S. Web services unit of the British telecom giant Cable & Wireless plc, the companies said today.
On Nov. 30 Cable & Wireless announced its intention to acquire most of Exodus in a deal valued at approximately $850 million. The agreement covers "a substantial portion of (Exodus') business and assets"
That includes 26 of Exodus' 35 U.S. data centers. A separate agreement will cover the sale of Exodus' two facilities in London and one apiece in Frankfurt and Tokyo.
The transaction is expected to close during late January/early February 2002. The agreement remains subject to customary closing conditions.
Exodus filed for Chapter 11 bankruptcy protection on Sept. 26, saying it had overexpanded as it pursued market share. Krause was appointed in September to succeed longtime chairman and CEO Ellen Hancock.
Under Hancock's leadership, the company grew rapidly during the dot-com boom times, but saw its financial condition deteriorate as the Internet and telecom industries slowed dramatically.
In recent months Exodus has worked hard to retain customers, with a steady stream of assurances that there would be no business interruptions. It started consolidating underutilized data centers, which meant moving customers to other Exodus centers.
Some of Exodus' marquee clients have begun housing equipment with new web hosts to spread their risk. Yahoo!, the Internet's busiest portal, this week chose Sprint as its new web host, following a similar move by giant auction site eBay. Weather.com relocated its servers to WorldCom late last year.
Exodus has not publicly identified which data centers will be sold to Digital Island and which will be consolidated. Most of the 11 Global Center facilities Exodus acquired last January have been handed back to Global Crossing, which continues to guarantee many of the leases.
The two companies recently negotiated an agreement in which Global Crossing would take over lease payments on 10 former Global Center facilities, and then advise Exodus on which leases to assume or reject.