Cable & Wireless acquire Digital Island

Cable and Wireless announced today that it has agreed to purchase Digital Island Inc in a deal worth a potential $340 million.

As part of the deal Cable & Wireless will offer to acquire all of the outstanding shares of Digital Island in an all-cash transaction at a price of US$3.40 per share of Digital Island common stock.

The transaction values Digital Island at approximately US$340 million, including approximately US$49 million of net debt. The boards of directors of both companies have unanimously approved the transaction.

According to a statement Cable & Wireless will commence a cash tender offer on or about 21 May 2001 for all of the outstanding shares of Digital Island’s common stock.

The agreement also provides for each Digital Island share not acquired by Cable & Wireless to be converted into a right to receive US$3.40 per share in cash in a merger to be completed following consummation of the tender offer.

The tender offer is subject to customary terms and conditions, including the tender of that number of shares that constitute at least a majority of Digital Island’s outstanding shares of common stock and certain US regulatory approvals.

Upon closing of the offer, Digital Island’s convertible note holders will have a right to put their notes at par. The companies expect the tender offer to close in approximately 30 days.