Now, if they could only come up with a workable new name.
Under the merger, Santa Clara, California-based USWeb/CKS will exchange 1.5 shares for each share of CKS stock in a deal valued today at about $540 million, with expected costs to combine the two companies reaching about $34 million.
In addition, USWeb will take an $11 million charge in the current quarter to write off an asset from a former CKS acquisition. The new company will be called USWeb/CKS, for now, and trade on the Nasdaq Stock Exchange under the symbol USWB.
The firm was forced to scuttle its chosen name, "Reinvent Communications," as it was sued by another company, and was served a partial injunction in the case.
By combining their talents, USWeb/CKS will be able to help a customer design a Web-based strategy and site, set a marketing plan, and facilitate e-commerce transactions.
News of the deal sent the company's stock climbing. USWeb was trading up 3-5/16, reaching 26-13/16 a share. That's up from a 52-week low of 7-1/16 a share and down from a high of 38-3/4.
USWeb/CKS will have 1,900 employees worldwide, and a client base including Audi, Harley Davidson, General Motors, Janus, Levi's, NBC, and Visa.
Under the new guard, CKS chief executive Mark Kvamme will become chairman of the board, while current USWeb CEO Robert Shaw, a former Oracle executive, will retain his post.
Joe Firmage, USWeb's former CEO and co-founder, who stepped down last month to be the company's chief strategy officer, will also keep his position.
Wall Street looked favorably upon today's deal, which was first announced in September amid criticism that it might not be a wise pairing, considering CKS' plummeting stock price during a volatile market.
But the Cupertino, California-based company has since rebounded, closing yesterday at 35, up from a 52-week low of 10.
Steven Horen, analyst at NationsBanc Montgomery Securities, said the merger benefits both companies.
"CKS has continued to be the leader in the market in terms of the size and scale of projects to build Internet-based points of presence," said Horen. "USWeb was much more heavily weighted toward systems integration, and CKS is creative. I think they're very complimentary, and the new leadership is terrific." Shaw's track record at Oracle included building the company's $2.5 billion consulting business.
Horen shrugged off some industry observers' assumptions that the rival companies will have a hard time integrating cultures.
"I think that they were competitors, now they're one company, and CKS has done a very good job with managing two mindsets: technology versus creative," he said.
Investment analysis firm Cruttenden Roth today upgraded its rating of USWeb to "buy," noting in a report that the acquisition should "catapult the company into a dominant position in the Internet consulting space." The investment firm estimates the professional services market for developing Internet, intranet and extranet-based applications should grow from $2.5 billion in 1996 to $13.8 billion in 2000.
In addition, Donaldson, Lufkin & Jenrette reiterated its "buy" rating yesterday, noting in a report that the only thing the investment banker didn't like about the merger was "the pending new name." The firm said it expects USWeb/CKS to sustain 60 percent to 70 percent growth in the coming years, with increasing profitability.
The company will compete in the design and Web integration space with niche players like Agency.com and Think New Ideas, as well as established powerhouses Booz Allen & Hamilton and PriceWaterhouseCoopers.
Indeed, professional services companies are playing a larger role in the market, with research firm International Data Corporation projecting there will be a 50 percent increase in the size of the market during the next 12 months.