Under the terms of the deal, AT&T is using a subsidiary, AT&T Corp, to acquire the privately held USinternetworking, USi, for $300m in cash and assumed debt. The transaction is expected to close in the fourth quarter.
Annapolis, Maryland-based USi is no stranger to acquisitions itself, having made a number of its own in recent years. In June 2004, it purchased Oracle-software-focused ASP Appshop in a deal reportedly worth between $40m and $50m. Two weeks prior to that it bought management consultant Strong3 Inc to add consulting expertise to its Ariba spend management hosted software service. In June 2003, it acquired CoreHarbor, an Ariba-focused managed services company. USi itself was acquired out of bankruptcy by Bain Capital LLC in January 2002.
USi specializes in providing software management and outsourcing services for business software from companies including Oracle, Siebel, PeopleSoft, IBM WebSphere, Microsoft, and Ariba. It offers application outsourcing, remote management, professional services, ISV enablement, e-business development and hosting, as well as security and risk management services to its 150-strong client base.
AT&T said these value-added growth services and capabilities are in high demand from companies increasingly using enterprise-wide software to drive down costs. This coupled with USi’s hosting and application management expertise, means that AT&T sees the deal as a good fit for its existing portfolio of enterprise hosting and managed services.
AT&T quoted figures from market researcher IDC, which estimates that application management services represented a $21.5bn market worldwide, and a $9bn market in the US in 2005.
The addition of USi’s technology and expertise in applications management to AT&T’s global reach, networking expertise and extensive hosting capabilities will broaden the range of solutions for our customers, said group president Forrest Miller who is in charge of AT&T’s enterprise services organization.
AT&T has approximately 30 internet data centers across four continents, and is already considered to be one of the leading hosting providers in the US. It provides a range of services to SMEs and large global corporations. Managed services includes support for corporate web sites, e-commerce, digital content delivery, multiplayer online gaming, collaborative intranets and extranets, along with the usual data backup and recovery capabilities.
Our enhanced capabilities will enable businesses around the globe to more efficiently and effectively manage their core operations, enhance their productivity and derive further business value from their relationship with AT&T, Miller said.
AT&T said USi will operate as a wholly owned subsidiary and business unit within its enterprise services organization, retaining USi’s team and its domestic and international operations. The CEO of USi, Andrew Stern, will continue as CEO under AT&T’s ownership.
AT&T is the largest US phone company, and was created when SBC Communications Inc closed its $16bn purchase of long-distance carrier AT&T Corp last November.
The AT&T of 1984 and the AT&T of 2006 are two entirely different beasts, with the principle difference being the fact that the current AT&T Inc is one of the baby bells (SBC Communications Inc) that was spun out of the old AT&T back in 1984.
It is the owner of the number-one mobile operator in the US, namely Cingular Wireless, which has a total customer base of approximately 54.1 million subscribers.
