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DIGITAL ISLAND ANNOUNCES AGREEMENT TO ACQUIRE SOFTAWARE
NETWORKS, A PIONEER IN DISTRIBUTED HOSTING SERVICES
Acquisition to Add More Than 550 Customers to Digital Island, Including
Sega.com, Paramount Pictures and Fox Kids
SAN FRANCISCO, July 17, 2000 - Digital Island, Inc. (NASDAQ: ISLD), a
leading Global e-Business Delivery Network, announced today that it has reached
a definitive agreement to acquire privately held SoftAware Networks Inc., a
leading Internet provider of distributed hosting, for approximately 9.375
million shares of Digital Island common stock and $20 million in cash. Based on
Digital Island's closing price on July 14, 2000, the transaction is valued at
approximately $450 million.
The combined company will have over 900 customers worldwide. Digital
Island plans to integrate SoftAware Networks' QuickResponse Global Server
Network (GSN), a service combining distributed hosting with a high-performance
network infrastructure, with its e-Business Delivery Network - complementing
Digital Island's suite of content delivery, hosting and network services.
Digital Island also intends to integrate SoftAware Networks' Los Angeles
facilities and personnel. Overall, the acquisition will accelerate Digital
Island's penetration into media and entertainment markets.
By adding SoftAware Networks' demonstrated engineering and technical
leadership in the deployment and management of Intel-based hosting solutions,
the acquisition will play a key role in Digital Island's build-out of its
broadcast-scale streaming media network, primarily through the addition of
SoftAware Networks' Windows expertise. In June, Digital Island announced that
it is working with Compaq Computer, Intel and Microsoft to build the Internet's
first broadcast-scale streaming media network capable of supporting up to 7.5
million simultaneous media streams.
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Digital Island Agrees to Acquire SoftAware Networks / Page 2
"SoftAware is a pioneer in quick-response hosting that we believe has
amassed a tremendous roster of customers, people and technology," said Ruann F.
Ernst, chairman and CEO of Digital Island. "The combination is a natural
extension of our e-Business Delivery Network, building a larger scale
infrastructure that increases our regional presence and improves our
participation in key market segments where rich interactive experiences drive
customer transactions."
In May, SoftAware Networks announced an agreement with Sega.com to help
host and build SegaNet, a major high-speed online console gaming network. "The
combination of Digital Island and SoftAware Networks will expand our ability to
scale and manage the Sega Dreamcast Network," said Brad Huang, CEO of Sega.com.
"The technology put in place by both companies, backed up by their world-class
engineers, holds the promise to greatly enhance our applications for 3D
multiplayer games, chats, tournaments and contests."
"We view this acquisition as an extremely positive step for our customers,
employees and business partners, who will all benefit from the additional
breadth of services and global reach offered by Digital Island," said Marshall
Rockwell, chairman and CEO of SoftAware Networks. "We share a vision of
providing the best possible end-user experience as a strategic advantage in the
Internet economy."
The acquisition, which is subject to regulatory review, is expected to be
finalized in Digital Island's current quarter, which ends September 30. Lehman
Brothers acted as the exclusive financial advisor to Digital Island in this
transaction.
Founded in 1994, SoftAware Networks is building an ultra-low latency
content distribution network delivering quick response times for highly
interactive applications.
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Digital Island Agrees to Acquire SoftAware Networks / Page 3
The company also offers professional administrative services, co-location and
Web hosting facilities. SoftAware currently serves more than 550 companies many
of whose central Internet strategy depends on ultra-low latency content.
Customers include Sega.com, Paramount Pictures, Fox Kids, Hollywood Stock
Exchange and YellowOnline. www.softaware.com.
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Digital Island(R) is a leading Global e-Business Delivery Network using
hosting, content delivery, networking and application services to help companies
improve their customers' online experience by making Web applications run faster
and more reliably and scale globally, resulting in more successful e-Business
transactions. Digital Island is headquartered in San Francisco with a presence
in 25 countries. www.digitalisland.net.
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Important Notice
Digital Island is a registered trademark of Digital Island, Inc. Footprint is a
trademark of Digital Island, Inc. All other trademarks are properties of their
respective owners.
This release may contain forward-looking statements that are subject to risks
and uncertainties. Important factors which could cause actual results to differ
materially from those in the forward-looking statements, include but are not
limited to: the company's short operating history which makes it difficult to
predict its future results of operations; the company's history of operating
losses and expected future losses which could impede its ability to address the
risks and difficulties encountered by companies in new and rapidly evolving
markets; the company's future operating results could fluctuate which may cause
volatility or a decline in the price of the company's stock; the possibility
that the company may not be able to price its services above the overall cost of
bandwidth causing its financial results to suffer; and other factors detailed in
the Company's filings with the Securities and Exchange Commission.
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Media contact at Digital Island:
Irwin Greenstein
415/738-4162
[email protected]
Investor Relations contact at Digital Island:
Sue Pirri
415/738-4673
[email protected]
Media contact at SoftAware Networks:
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Digital Island Agrees to Acquire SoftAware Networks / Page 4
Barry Sulpor
310/577-6849
[email protected]
