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June 14, 2003 — (WEB HOST INDUSTRY REVIEW) — Vancouver-based Web hosting firm NetNation Communications (netnation.com) said late yesterday it
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planned to merge with Hostway (hostway.com) in a cash deal valued at $10
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million.
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Chicago-based Hostway has been aggressively expanding its operations over
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the past three years. The company has operations in the United States,
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United Kingdom, the Netherlands, Asia and Australia while operating data
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centers in Chicago, London and Seoul, Korea. It was not immediately clear if
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NetNation’s data center, which is located in downtown Vancouver, would be
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consolidated.
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According to Hostway, the deal is a “decisive” moment in its expansion
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strategy, which now includes six international “hosting centers.” Founded in
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1996, Hostway currently hosts more than 100,000 sites, a number which will
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increase upon the completion of its acquisition of NetNation; according to
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its most recent annual report, NetNation hosted 23,000 sites in 120
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countries as of December 2002, and employed a staff of more than 70.
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NetNation also operates DomainPeople, an ICANN-accredited registrar that has
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registered more than 300,000 domain names worldwide.
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“NetNation is a solid Web hosting company with a proven track record with
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clients worldwide,” said Lucas Roh, CEO of Hostway. “The combination of our
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two complementary organizations has the clear strategic benefits of
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increased scale and new growth opportunities.”
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The announcement comes on the heels of a planned one-for-2.5 stock split
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aimed at keeping NetNation in compliance with the Nasdaq’s $1.00 minimum bid
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price. According to the companies, the deal is calculated and based on
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NetNation’s pre-consolidated share price and number of outstanding shares.
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Under the terms of the agreement, NetNation shareholders will receive the
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pre-consolidated price of $0.66 per share. Pre-consolidated NetNation shares
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closed at 51 cents per share Friday afternoon, and the company’s shares
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begin trading on a post-consolidation basis Monday.
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“We are very pleased to enter into this merger agreement with Hostway, an
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organization recognized for its commitment to customer service, and quality
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products and services,” said David Talmor, President and Chairman of
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NetNation. “The proposed merger provides Hostway and NetNation customers
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with truly global reach in six centers around the world, and the combined
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strengths of both companies will benefit our customers through service
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innovations and even better customer service.”
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NetNation said it expects the transaction to close in September.
