Buyers Market Starts to Sizzle

By eweek  |  Posted 2001-05-21

The consolidation that the market has been waiting for in the Internet consulting space is picking up momentum, as evidenced by the recent acquisitions of Mainspring by IBM and Proxicom by Dimension Data.

The current state of depressed stocks has made former highfliers reasonable acquisition targets. And with their stocks under water, solutions providers are looking for buyers.

Scott Silk, VP of marketing and business development at ePresence, a directory and security services provider, says his company, with $70 million in cash, has been fielding calls from troubled firms looking for a white knight.

"We are getting calls from private and public companies that are looking for a buyer," says Silk.

Dimension Datas bid to acquire Proxicom last week was followed by a spate of similar actions.

Digital Island announced it will be acquired by Cable & Wireless in a $340 million cash deal. Analysts say the deal cuts the companys funding gap and gives it a cushion to allow it to grow its Web-hosting business., which has seen its stock tumble from Wall Streets grace, saw a small uptick to $2.52 from its $2.35 figure two weeks ago on the news that it would be acquired by Seneca Investments.

Seneca Investments, a venture formed earlier this year by Omnicom Group and Pegasus Partners LLP, will buy the stakes from founders Chan Suh and Kyle Shannon. Remaining shares will be bought for $3 per share. posted a Q1 loss of $10.3 million and plans to cut 350 jobs.

ASP Interliant recently partnered with Infonet Service Corp. to offer Interliants Managed Messaging solution on the Lotus platform around the globe.

Also, Rare Medium Group, another Internet services firm, has agreed to be acquired by Motient Corp., a company that operates satellite networks and provides two-way mobile and Internet communications services. The cash and stock deal will make Rare Medium a wholly owned subsidiary.

Among last weeks losers were eLoyalty, Viant and C-bridge, which have struggled with revenue in a highly competitive climate.

Analysts suggest that integrators such as Acxiom, Answerthink and Digitas have seen a recent surge in their stock prices because, despite posting losses for their recent quarters, they may be acquisition targets.

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