Nov. 11, 2002 -- Digex, one of the leading providers in managed hosting, said today that it will explore a possible sale of the company, with the support of WorldCom.
The Laurel, Md. provider said it is forming a special committee to explore strategic options, including a sale, and has hired the investment bank Lane, Berry & Co. International as its advisor.
. "We believe the retention of a respected investment bank is in the best interests of the company and will be welcomed by all of our constituencies," said Digex President and CEO George Kerns.
Those constituencies include WorldCom. Digex is organized as a separate public company, and was not included in WorldCom's Chapter 11 filing. But WorldCom owns a controlling stake in the company and funds much of its operations.
"We fully support the Digex Board and the decision it has announced," said John Dubel, Chief Financial Officer of WorldCom. "As the company's largest shareholder, we are committed to its continued growth and development."
The decision leaves another major player in the managed hosting business facing a potential transition. On Wednesday Cable & Wireless is expected to announce a restructuring of its Exodus unit, which provides managed hosting services.
At the close of the second quarter, Digex had nearly 700 customers, including J.Crew, Credit Lyonnais and Readers Digest. Those customers would be the chief prize for a potential acquirer.
Kerns said the goal of the review will be to solidify Digex' business going forward.
"Digex is committed to delivering high-value managed hosting services to enterprises and has been since its inception," he said. "We hold a leadership position in this market and we believe it is important to maintain the resources and financial structure that will enable the company to grow in the long term."