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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
__________________________
Date of Report (Date of
earliest event reported): June 5, 1997
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INTERMEDIA COMMUNICATIONS INC.
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(Exact name of registrant as specified in its charter)
Delaware 59-2913586
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(State or other jurisdic- (I.R.S. Employer
tion of incorporation or Identification No.)
organization)
0-20135
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(Commission File Number)
3625 Queen Palm Drive, Tampa, Florida 33619-1309
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 829-0011
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ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS.
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On June 5, 1997, the Registrant issued the press release attached hereto as
Exhibit A.
ITEM 7. EXHIBITS
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Press Release, dated June 5, 1997.
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 5, 1997
INTERMEDIA COMMUNICATIONS INC.
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(Registrant)
By: /s/ Robert M. Manning
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Name: Robert M. Manning
Title: Senior Vice President and Chief
Financial Officer
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EXHIBIT INDEX
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Exhibit Page
No. Description No.
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99 Press Release, dated June 5, 1997.
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EXHIBIT 99
[LETTERHEAD OF INTERMEDIA COMMUNICATIONS]
NEWS RELEASE
CONTACT: Robert M. Manning
Chief Financial Officer
(813) 829-2403
or
Chris Brown
Sr. Vice President, Investor Relations
(813) 829-2408
INTERMEDIA COMMUNICATIONS TO ACQUIRE DIGEX INCORPORATED
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COMBINATION EXTENDS INTERMEDIA'S LEADERSHIP POSITION IN FAST-GROWING
BUSINESS DATA COMMUNICATIONS MARKET
TAMPA, FLORIDA (June 5, 1997) -- Intermedia Communications (ICIX: Nasdaq/NM)
and DIGEX Incorporated (DIGEX) (DIGX: Nasdaq/NM) today announced that they have
executed a definitive agreement for the acquisition of DIGEX by Intermedia for
$13 per share or approximately $150 million. The acquisition will be
consummated through a tender offer for all outstanding DIGEX shares, which will
begin next week and will be followed by a cash merger. Management and other
DIGEX option holders will receive Intermedia stock options for their DIGEX stock
options, in lieu of receiving cash. The acquisition was unanimously approved by
the Board of Directors of both companies, and shareholders owning a majority of
the outstanding shares of DIGEX have agreed to sell their shares to Intermedia
for $13 per share.
Intermedia will hold a conference call at 9:00 AM EDT to discuss this
transaction. To participate in this conference, call (800) 236-9153. A 24-hour
replay will be available by calling (800) 633-8284, ID 2832850.
DIGEX is among the limited number of national First Tier Internet service
providers which positions the company to be a strong participant in the fastest
growing sector of the Internet market--business connectivity. It is also a
market leader in Web hosting and management and operates the world's largest
Microsoft NT Web site management facility. DIGEX has over 2,000 customers and a
staff of 450 people, including approximately 150 in sales and marketing.
Monthly annualized revenue was approximately $40 million for March 1997. The
combined company would have had annualized monthly revenue of $241 million for
the same month, with 37% of that total from enhanced data services. The
combined company will have over 18,000 business and government customers, and
over 1,500 employees.
EXCELLENT STRATEGIC FIT
"A fundamental element of Intermedia's mission and a key to its success in
acquiring business telecom market share is the continued expansion of our strong
leadership position in enhanced data
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ICIX Announces Definitive Agreement
To Acquire DIGEX Incorporated
Page 2
June 5, 1997
services," commented David C. Ruberg, Intermedia's Chairman, President, and
Chief Executive Officer. "This acquisition meets all of our criteria for
strategic acquisitions. Intermedia is acquiring an established quality customer
base, accelerating its time to market with new services, expanding and
increasing network density, and adding high quality employees. With this
acquisition, Intermedia becomes a provider with one of the broadest portfolios
of high value-added data services integrated with traditional local and long
distance voice services. The combined company will have a strong base of
Internet connectivity services. These will enable Intermedia to expand delivery
of a wide range of hosted business applications including multimedia
applications, supporting the needs of electronics commerce."
SIGNIFICANT FINANCIAL SYNERGIES
"Significant financial and operational synergies will be realized upon
integrating the two companies," added Robert M. Manning, Intermedia's Chief
Financial Officer. "We expect to realize minimum cost savings of approximately
$4 million in the second half of 1997, $12 million in 1998, $14 million 1999,
and increasing savings in subsequent years."
Approximately 75% of DIGEX's backbone network overlaps existing or planned
Intermedia network routes. Additional savings should result from substantially
greater purchasing power for leased backbone circuits, from CLEC interconnection
agreements, and from Intermedia's owned local network facilities. Lastly, the
most significant benefit should come from combining the sales efforts and cross-
selling services to the 18,000 business customers of the combined company.
These opportunities were not included in Intermedia's estimate of synergies.
Manning reported that Intermedia expects the transaction to close in the
third quarter of 1997. The resulting third quarter EBITDA for the combined
company is expected to be within the current range of analysts' expectations for
Intermedia. "With the synergies we expect, and the continued rapid growth in
DIGEX's business, this acquisition should accelerate our progression toward
positive free cash flow and adds meaningfully to EBITDA beginning in 1998," he
added.
"After elimination of the duplicate network facility costs, Intermedia will
have acquired a rapidly growing revenue stream with attractive margins that
provide significant incremental return on its already invested capital
infrastructure," Manning concluded.
DIGEX's current network deployment and customer base are concentrated in the
large city markets in the eastern U.S., with service also provided in major west
coast markets. Over 80% of the cities served are covered today by both
Intermedia and DIGEX, increasing the density of Intermedia's already robust
network in the eastern U.S.
MCCLEARY TO CONTINUE LEADING THE DIGEX ORGANIZATION
Chris McCleary, DIGEX's current Chairman, President, and Chief Executive
Officer, and his management team will continue to manage the DIGEX operation.
"Chris has done an excellent job
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ICIX Announces Definitive Agreement
To Acquire DIGEX Incorporated
Page 3
June 5, 1997
of building a team and a business," commented Ruberg. "We will maintain the
focus he has developed by supporting all of his team's efforts with Intermedia's
resources throughout our service territory.
"DIGEX's consultative selling approach matches Intermedia's; and the DIGEX
customer base and target markets reinforce Intermedia's, allowing us access to
more cross-selling opportunities in these markets," added Ruberg. "The skills
needed to effectively sell DIGEX's current services provide an excellent
foundation for the DIGEX staff to sell Intermedia's full suite of integrated
voice and data telecom services."
Headquartered in suburban Washington, DC, DIGEX is a leading independent
national Internet carrier focusing exclusively on business customers. DIGEX
offers a comprehensive range of Internet solutions, including high-speed
dedicated business Internet connectivity, corporate Web site management services
and private network capacity. The DIGEX Gold Ring/SM/ national fault-tolerant
fiber optic Internet network, engineered utilizing Cisco Systems (NASDAQ: CSCO)
Internet Operating System technology, provides highly reliable service for
mission-critical Internet applications. Company news, product, and service
information are available at www.digex.net.
Intermedia Communications is one of the nation's fastest growing
telecommunications companies. Intermedia provides integrated telecommunications
solutions to business and government customers. These solutions include voice,
data, and video; local and long distance services; and advanced access services
in cities throughout the eastern U.S. Its enhanced data offerings, including
frame relay, ATM, and Internet services offers seamless end-to-end service
virtually anywhere in the world.
Intermedia is headquartered in Tampa, Florida, and is traded on the Nasdaq
National Market under the symbol ICIX. Intermedia can be found on the World
Wide Web at http://www.icix.net.
Bear, Stearns & Co., Inc. acted as exclusive financial advisor to Intermedia
Communications for this transaction. Friedman, Billings, Ramsey & Co., Inc. was
the financial advisor for DIGEX Incorporated.
Statements contained in this news release regarding expected revenues and
other planned events are forward-looking statements, subject to uncertainties
and risks, including, but not limited to, the demand for Intermedia's products
and services, and the ability of the Company to successfully implement its
expanded and accelerated capital deployment plan, each of which may be impacted,
among other things, by economic, competitive or regulatory conditions. These
and other applicable risks are summarized under the caption "Risk Factors" in
the Company's Form 10-K Annual Report for its fiscal year ended December 31,
1996.
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