EarthLink Inc. (Nasdaq: ELNK) announced Thursday it will snap up OneMain.com (Nasdaq: ONEM) for about $308 million, in a deal designed to strengthen its coverage of rural communities and smaller cities.
EarthLink also announced Thursday plans to repurchase up to 5 million shares of EarthLink common stock on the open market.
Earthlink, the second largest Internet service provider in the US behind America Online (NYSE: AOL) saw shares close at 17 15/16 Wednesday, far below their 52-week high of 71 1/4. Shares got a lift recently from a Sprint investment.
Shares in OneMain.com, which has focused on providing Internet access in rural and hard-to-reach areas, closed at 8, also far below their 52-weel high of 34. The company has been seen as a takeover target for quite some time.
EarthLink will purchase OneMain.com in a cash and stock deal worth $308 million, or $12.27 per share for each of OneMain.com's 25.1 million outstanding shares. The purchase consists of about $150 million in cash and 8.8 million in EarthLink common stock, valued at $158 million at the closing price of $17.94 on June 7.
The two companies together have more than 4.2 million members, including a subscriber base of approximately 730,000 narrowband accounts, 27,000 Web hosting customers, and 5,000 broadband customers from OneMain.com. EarthLink said it now expects to end the year with around 5 million members and annualized revenues of $1.3 billion.
"The acquisition of OneMain.com strategically positions EarthLink to capture market share in one of the fastest-growing segments in the ISP marketplace -- rural America and smaller cities,'' said Garry Betty, CEO of EarthLink in a statement.
The transaction is expected to close in the fourth quarter of 2000.