EXHIBIT 99.1
CONFIDENTIAL
EARTHLINK AND MINDSPRING ANNOUNCE STRATEGIC MERGER
EARTHLINK AND MINDSPRING COMBINE TO CREATE THE NATION'S SECOND LARGEST
INTERNET ACCESS PROVIDER
NEW YORK, September 23, 1999 - EarthLink (NASDAQ: ELNK) and MindSpring (NASDAQ:
MSPG) jointly announced today that they have signed a definitive merger
agreement that will create the nation's second largest provider of Internet
access, with an estimated combined base of over three million members upon
completion of the deal.
In the merger, MindSpring and EarthLink will both merge into a newly
formed public company, with MindSpring stockholders receiving one share of the
new company stock for each share of MindSpring stock and EarthLink stockholders
receiving 1.615 shares of the new company stock in exchange for each share of
EarthLink stock. The combined company will be known as EarthLink and will trade
under the Nasdaq symbol "ELNK." Subject to several conditions, including
regulatory approvals, approval by both companies' shareholders, and certain
third party consents the transaction is expected to close in the first quarter
2000.
Based on the closing price of both companies' stock on Wednesday,
September 22, combined market capitalization of the new company would be over
$3 billion. Based on results for the quarter ending June 30, 1999, the merged
company would have revenues of nearly $650 million annualized. Also as of
June 30, 1999, the new company would have a combined cash balance of
--more--
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more than $500 million, which is adjusted for the anticipated redemption of all
of MindSpring's currently outstanding 5% convertible subordinated debt.
The merger marks a culmination of aggressive growth strategies pursued
independently by both EarthLink and MindSpring over the past five years. By
combining their businesses, strong marketing channels, award-winning customer
service and acquisition expertise, the merged company should surpass all other
national ISPs by establishing itself as the clear alternative to America Online.
In addition, a recent JD Power and Associates study ranked MindSpring and
EarthLink numbers one and two, respectively, in overall customer satisfaction
among the largest National Internet Service Providers.
The new company will be led by executives from both EarthLink and
MindSpring. In the new company, Charles Brewer, MindSpring's founder, chairman
and CEO will be chairman; Charles "Garry" Betty, EarthLink's president, CEO will
be CEO; Mike McQuary, MindSpring's president, chief operating officer will be
president; and Sky Dayton, EarthLink's founder and chairman will be a director
in the new company. Betty and McQuary will also serve on the Board of Directors.
"I believe this marriage of equals will position the new company as the
clear leader in the Internet access arena," said Betty. "By leveraging the
synergies between our operations, marketing channels and member service
philosophies, we will have built a solid platform to service our current members
and, at the same time, accelerate our aggressive growth strategy."
"Sky and I both founded our companies after our first frustrating
attempts to get on the Internet," said Brewer. "We created our companies with a
deliberate focus on providing our members with superior service. So it's no
accident that both EarthLink and MindSpring have consistently been recognized as
the two leading ISPs in customer service and satisfaction. Together, we will
continue delivering the same award-winning service and support that our members
expect."
"Five years ago, Charles and I were among the few visionaries who saw
the potential in the Internet to redefine the way people communicate," said
Dayton. "In many ways, MindSpring and EarthLink's vision, philosophy and growth
have been a mirror image of each other since we started. But with more than 70
percent of US households still not connected to the Internet, we both realize we
are still facing a market in its infancy. This merger combines two companies who
share a vision, and it gives us the tools to bring Internet service to the
masses."
"This unique partnership literally brings together some of the best
minds in the Internet industry," said McQuary. "We believe that the exceptional
pool of talent and resources from both sides will propel the new company to new
heights in the rapidly growing Internet space."
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TRANSACTION TERMS AT-A-GLANCE
- - Headquartered at MindSpring's current headquarters in Atlanta, the new
company will carry the "EarthLink" name and will trade under EarthLink's
current NASDAQ symbol, ELNK.
- - The new company will adopt MindSpring's Core Values and Beliefs as the
company's guiding principles
- - This will be a stock-for-stock merger of equals. MindSpring and EarthLink
will both merge into a new company. MindSpring shareholders will receive
one share of stock in the new Company in exchange for each MindSpring
share, and EarthLink shareholders will receive 1.615 shares of stock in the
new company in exchange for each EarthLink share
- - Merger is expected to be completed during the first quarter 2000
- - The merger is structured to be accounted for as a pooling-of-interests
- - EarthLink's broad business alliance and contractual arrangements with
Sprint will all remain intact.
- - EARTHLINK AND MINDSPRING have each granted the other an option to purchase
shares equal to up to 19.9% of the other's common stock under certain
circumstances.
- - Certain significant and principal stockholders of the companies have agreed
to vote in favor of the merger.
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KEY COMPANY HIGHLIGHTS UPON CLOSE OF TRANSACTION
- - An estimated combined member base of approximately 2.8 million subscribers
- - Initial projected marketing expenditure of $80MM per quarter
- - 90,000 member Web hosting accounts and a full range of related products and
services
- - Nearly 4,000 employees in Atlanta; Dallas; Phoenix; Harrisburg, PA.;
Pasadena, Sacramento and San Jose, CA; and Seattle
- - A strong history of award-winning service and customer support. A 1999 J.D.
Power and Associates study ranked MindSpring and EarthLink numbers one and
two, respectively, in overall customer satisfaction among the largest
national Internet service providers.
ABOUT MINDSPRING
MindSpring is a leading national Internet service provider focused on
delivering outstanding service and support to its customers. MindSpring's
dial-up subscribers can browse the World Wide Web, send electronic mail,
participate in informative on-line chats and access over 20,000 newsgroups.
MindSpring offers local Internet service in more than 890 locations throughout
the United States. The MindSpring Biz division is a leading provider of Web
hosting services and domain registrations, and offers other value-added services
such as Web page design.
ABOUT EARTHLINK
EarthLink is one of the world's leading Internet service providers.
Through its unified EarthLink Sprint Internet access service, the company makes
the Internet relevant and productive to more than 1.3 million individuals and
businesses every day. Headquartered in Pasadena, EarthLink provides a full range
of innovative access and hosting solutions to thousands of communities
internationally from more than 2,300 points of presence. EarthLink and Sprint
Corporation (NYSE: FON) have formed a broad business relationship to create an
Internet service with the potential to reach millions of new customers. Sprint
is a global communications company and one of the world's largest carriers of
Internet traffic. Information about EarthLink and EarthLink Sprint services is
available by calling (800) 395-8425 and through EarthLink's Web site at
www.earthlink.net.
Certain of the statements contained in this release are forward-looking
statements (rather than historical facts) that are subject to risks and
uncertainties that could cause actual results to differ materially from those
described. With respect to such forward-looking statements, the companies seek
the protections afforded by the Private Securities Litigation Reform Act of
1995. These risks include, without limitation, (1) that the companies will not
retain or grow their member bases, (2)
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that the companies will fail to be competitive with existing and new
competitors, (3) that the companies will not be able to sustain current
growth, (4) that the companies will not adequately respond to technological
developments impacting the Internet, (5) that needed financing will not be
available to the companies if and as needed, and (6) that the Year 2000
problem will adversely affect the companies' operations. This list is
intended to identify certain of the principal factors that could cause actual
results to differ materially from those described in the forward-looking
statements included elsewhere herein. These factors are not intended to
represent a complete list of all risks and uncertainties inherent in the
companies' business, and should be read in conjunction with the more detailed
cautionary statements included elsewhere herein in the companies' most recent
filings with the SEC.
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