EXHIBIT 99.1
NEXTLINK AND CONCENTRIC NETWORK ANNOUNCE $2.9 BILLION
TRANSACTION TO CREATE PREMIER BROADBAND INTERNET
COMMUNICATIONS COMPANY
--Proposed transaction to create a fully integrated communications company,
offering a complete range of voice, data and Internet services for growing
businesses worldwide --
MCLEAN, Va. and SAN JOSE, Calif. (January 10, 2000) - NEXTLINK
Communications, Inc.(NASDAQ:NXLK) and Concentric Network Corporation
(NASDAQ:CNCX) today announced that they have entered into a definitive agreement
for the combination of the two companies, creating a next-generation, broadband
communications company that will provide a full range of voice, data and
Internet communications services. The transaction, valued at approximately $2.9
billion, is expected to close in the second quarter of this year.
In the transaction, each share of Concentric Network common stock will be
exchanged for $45.00 of NEXTLINK common stock, subject to a collar. The actual
number of shares of NEXTLINK common stock to be exchanged for each Concentric
Network common share will be based on the 20 day average trading prices of
NEXTLINK common stock prior to closing, but will not be less than 0.495 (if
NEXTLINK's average stock price exceeds $90.91), or more than 0.650 (if
NEXTLINK's average stock price is less than $69.23). Based on NEXTLINK's closing
price of $78.50 on January 7, 2000, the ratio would be 0.573 NEXTLINK shares per
Concentric Network share and Concentric Network shareholders would hold
approximately 17.8 percent of the fully diluted shares of the combined company.
The transaction is intended to be tax-free to the NEXTLINK and Concentric
Network shareholders and will be accounted for as a purchase. The transaction,
which has been unanimously approved by both the NEXTLINK and Concentric Network
Boards of Directors, is subject to approval by Concentric Network's
stockholders. Eagle River Investments, the holder of a majority of NEXTLINK's
voting power, has agreed to approve the transaction. The transaction is subject
to certain other customary closing conditions, including regulatory approvals.
The parties expect to obtain consent of Concentric's bond and preferred stock
holders to the transaction, but have reserved the right to restructure the
transaction so that these consents will not be required.
"This is an important day for NEXTLINK and Concentric. We have combined
NEXTLINK's rapidly growing local and long distance businesses and strategic
broadband network assets with one of the nation's leading web hosting and
Internet data services companies," said NEXTLINK Chairman and Chief Executive
Officer Dan Akerson. "With the addition of Concentric's top management in the
Internet service business to the NEXTLINK
team, we firmly believe that the combination of these two entrepreneurial
companies will quickly provide dramatic and significant cross selling
opportunities and other synergies."
Together, the companies will possess an unrivaled set of broadband network
assets and comprehensive data, e-commerce and Internet business services. As a
facilities based carrier, NEXTLINK is acquiring exclusive rights to a 16,000
mile high-speed, IP-centric fiber optic backbone network. It also operates very
robust local fiber optic networks throughout top cities across the United
States. Additionally, as the largest holder of fixed wireless spectrum in North
America, with licenses covering 95 percent of the population in the top 30
markets in the United States, NEXTLINK intends to complement its local fiber
networks with broadband wireless service.
This infrastructure capability combined with Concentric's leading market
share position for business-grade DSL, number two market position for shared Web
hosting, and e-commerce capabilities in application hosting, managed security,
and virtual private networks (VPN), will create a combined company that can
compete at the highest levels of the broadband communications industry in cost
structure and service offerings. Together, NEXTLINK and Concentric will offer a
complete, single source communications solution for small and medium-sized
businesses, including the full array of Concentric's Internet business, data
center and application service provider (ASP) services, transported across
NEXTLINK's networks.
The combination of NEXTLINK's unique broadband infrastructure assets with
Concentric's sophisticated data and Internet product portfolio is also expected
to result in significant potential combination benefits for the combined
company. NEXTLINK expects to realize meaningful margin enhancements by moving
local and data traffic onto its broadband metropolitan and broadband wireless
networks, as well as onto its national backbone infrastructure. And through
these "on-net" benefits, NEXTLINK and Concentric expect to accelerate their
respective revenue growth rates by cross-selling local telecommunications and
data and Internet services to their respective customer bases.
Additionally, Concentric Network's pending acquisition of London-based
Internet Technology Group, plc (ITG), expected to close in the first calendar
quarter, will give the combined company an established base in the European data
marketplace. ITG operates an extensive Internet backbone access within Europe
with extensive ISP peering relationships. ITG also possesses transatlantic
telecommunications capacity, multiple European data centers and offers a full
range of connectivity services to businesses.
"The integrated value proposition of the combination is clear," said
Concentric Network Chief Executive Officer Henry R. Nothhaft. "The pairing of
Concentric's value-added access, hosting and e-commerce services with NEXTLINK's
expansive fiber optic and wireless facilities, will position the combined
company to realize significant and easily identifiable cross selling and cost
reduction synergies. This combination of IP and transport layer facilities
within one company will be a potent mixture for successful, long-term execution
in the marketplace."
"The capabilities of the two companies will result in a differentiated
service offering to the small and medium business customers that both NEXTLINK
and Concentric have already had
-2-
success reaching in the past few years," continued NEXTLINK Chairman and Chief
Executive Officer Dan Akerson. "Additionally, using our combined capabilities,
we plan to aggressively and successfully compete for the business of many of the
nation's Fortune 1000 companies. We will have a very strong product set and a
distribution network of both direct sales representatives and agents that will
all be aimed at many of the largest and fastest growing customer segments in the
business arena."
Dan Akerson will remain Chairman and CEO of the combined company, and Henry
R. Nothhaft will become a Vice Chairman of the NEXTLINK board and lead the
combined company 's retail Internet and data services businesses, which will
continue to be offered under the Concentric brand name. Concentric Network will
also have an additional member appointed to the combined company's board of
directors. The combined company headquarters will be in McLean, Virginia, and
the Concentric Network operations will remain in San Jose, California. The total
employee base will be approximately 4,000.
In the transaction, NEXTLINK was advised by Merrill Lynch & Co. and
Concentric Network was advised by Bear, Stearns & Co. Inc.
About NEXTLINK
- --------------
NEXTLINK provides high quality, broadband communications services to
businesses over fiber optic and broadband wireless facilities across the United
States. NEXTLINK currently is providing service in 49 markets. The company is
the largest holder of broadband fixed wireless spectrum in North America, with
licenses covering 95 percent of the population in the top 30 markets in the
United States. NEXTLINK plans to use wireless capabilities plans to complement
and extend the reach of its local fiber optic networks in the markets in which
NEXTLINK has spectrum. Additionally, NEXTLINK is acquiring exclusive rights to
use certain fibers and a conduit throughout a 16,000-mile high-speed, IP-centric
fiber optic backbone network that will connect over 50 cities in the United
States and Canada. The network is expected to be completed in 2001, with
NEXTLINK turning on segments of the network during 2000. Through this unrivaled
collection of facilities, NEXTLINK will provide integrated, end-to-end
telecommunications solutions to its customers. For more information, visit
http://www.nextlink.com.
About Concentric Network Corporation
- ------------------------------------
Concentric Network provides complete Internet business solutions for small-
and medium-sized enterprises, including DSL access, Web hosting and e-commerce.
The company also offers data center services, virtual private networks,
dedicated access, and application infrastructure services for delivering
applications over the Internet or a VPN. Concentric's services are offered
through a nationwide network of data centers and a private, nationwide ATM
network. All Concentric Network services are backed by 24/7 customer care and
most include service level agreements. Concentric Network is headquartered in
San Jose, California with operations in Irvine, CA, Chicago, IL, St. Louis, MO,
Saginaw, MI. and Secacus, NJ. For more information, visit
http://www.concentric.net/ or contact Public Relations at
publicrelations@marine.com.
-3-
# # #
The statements contained in this release which are not historical facts are
"forward-looking statements" (as such term is defined in the Private Securities
Litigation Reform Act of 1995). These statements include those describing the
enhanced product and service offerings, the competitive capabilities and
potential synergeries of the combined companies, the expected timing of
Concentric Network's pending acquisition of ITG, the expected timing of the
proposed transaction between NEXTLINK and Concentric Network and the expected
timing of the implementation of NEXTLINK's network. Management wishes to caution
the reader that these forward-looking statements, regarding matters that are not
historical facts are only predictions and are subject to risks and uncertainties
and actual results may differ materially from those indicated in the
forward-looking statements as a result of a number of factors. These factors
include, but are not limited to, the combined company's ability to successfully
market its products and services to current and new customers in a competitive
marketplace, to design and construct fiber optic networks, install cable and
facilities, including switching electronics, to develop, install and provision
LMDS equipment and interconnect that equipment with the Company's fiber networks
and connect the networks, including LMDS equipment to customers and on
satisfactory terms and conditions, and certain risks related to the Company's
national network strategy. Additional factors include the companies' ability to
successfully integrate their operations, products and services, and to timely
obtain the regulatory and stockholder approvals that are conditions to closing
the proposed transaction.
Attention Editors and reporters:
There will be an audio news conference held at 10:00 a.m. EST / 7:00 a.m. PST.
Media and industry analysts can participate by dialing 800-777-5216. A 48 hour
replay of the conference can be accessed by dialing 800-633-8284, reservation
#14129306.
Attention Television editors and reporters: There will be b-roll of NEXTLINK and
Concentric available via satellite feeds at 9:00 a.m. EST, 12:00 p.m. EST, and
3:00 p.m. EST. Feed is available on C-band Telestar 4, transponder 6.
NEXTLINK Contact: Todd Wolfenbarger / media and industry analysts
425.519.3946 / 206.399.6770 portable
twolfenbarger@nextlink.com
Nancy Bacchieri / financial analysts
425.519.8940
Concentric contact: Jenna Dee
408.817.2297
jdee@marine.com
Lerry Wilson
Wilson McHenry Company
650.356.5200
lwilson@wmc.com
-4-