Sept. 11, 2002 -- ClearBlue Technologies has acquired a controlling interest in managed hosting provider NaviSite, buying out stakes held by Hewlett Packard Financial Services and CMGI, ClearBlue said yesterday.
The deal further solidifies ClearBlue's position as the most active consolidator in the data center sector, following earlier purchases of the assets of COLO.COM, and Applied Theory.
ClearBlue also gains a high-profile partner in Hewlett Packard Financial Services, which will take an "active equity role" in ClearBlue.
NaviSite, whose customer list includes the web search engine AltaVista, will continue to operate as an independent company and trade on the NASDAQ small cap market, with ClearBlue owning 79 percent of its equity. Shares of NaviSite closed yesterday at 22 cents a share.
Under terms of the deal, CMGI and HP Financial Services exchanged their stakes in NaviSite for 24 percent of the equity of ClearBlue. CMGI owned 76 percent of the equity in NaviSite and a $10 million convertible note, while HP Financial Services held 3.2 million NaviSite shares and a $55 million convertible debt position. The transactions were conducted through two ClearBlue subsidiaries, ClearBlue Technologies Equity and ClearBlue Finance
"By combining NaviSite's quality services with ClearBlue's industry expertise we hope to create a strong player in a consolidating market," said ClearBlue chairman and CEO Andy Ruhan, who said the deal "helps further our objective of building an industry- and market-leading services and hosting company geared to the needs of mid-size businesses."
HP Financial Services said it expects its relationship with ClearBlue will build upon the joint sales and marketing begun in an April alliance agreement between HP and NaviSite.
"We see the managed hosting market growing," said Irv Rothman, CEO and President of HPFS. "This transaction is a positive move for HPFS as we move from a debt holder to partner."
The deal also provides an exit for CMGI, the technology incubator which is rapidly divesting non-core holdings in its portfolio. On Monday CMGI cut its financial ties to Internet advertising firm Engage.
"Our decision to sell our position in NaviSite, our sole infrastructure business, is another step in paring our core businesses, consistent with the plan discussed in June," said Tom Oberdorf, Chief Financial Officer of CMGI.
NaviSite CEO Tricia Gilligan said the deal provides new capabilities for both ClearBlue and NaviSite.
"By combining NaviSite's high quality service delivery with CBT's resources, this transaction creates a full-service eServices company for customers and prospects," said Gilligan.
ClearBlue is a privately-held managed service provider that manages a nationwide, distributed portfolio of carrier-neutral data centers. Based in San Francisco, ClearBlue employs about 280 people worldwide.
NaviSite is a leading managed hosting provider for E-Business Applications. It is based in Andover, Mass.