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WorldCom to buy CompuServe

By Denise Pappalardo, Clare Haney and Rebecca Sykes
Network World and IDG News Service

WorldCom, Inc., is beefing up its Internet business yet again in a $1.2 billion deal with CompuServe Corp. and America Online, Inc.

In a stock swap deal WorldCom will buy CompuServe Corp. from H&R Block for a total of $1.2 billion, equaling about $13 per share. WorldCom will keep CompuServe's network services division and it1,600 customers under its belt and sell the CompuServe's Interactive Services Division to AOL in addition to $175 million in cash.

In exchange for CompuServe's 2.6 million on line subscribers and the cash, AOL will turn over ANS Communications, its ISP subsidiary.

When the deal is final, ANS will be the third ISP that WorldCom owns. Late last year WorldCom purchased MFS Communications Inc., who purchased UUnet Technologies earlier last year. Prior to acquiring MFS and UUnet, WorldCom already owned GridNet, an Atlanta-based ISP that offers VPN services, but primarily focuses on wholesale Internet services.

WorldCom executives did not mention how they plan on integrating networks and services from its three ISP units.

Last week, published reports suggested that U.S. investment firm Welsh, Carson, Anderson & Stowe would acquire CompuServe. But WorldCom outbid the investment firm, according to reports today.

In addition, AOL announced that German media company Bertelsmann AG, its partner in its AOL Europe joint venture, will pay AOL $75 million and both companies will invest an additional $25 million in an expanded joint venture to operate CompuServe's European online service. CompuServe's user base in Europe is around 850,000, published reports said today.

WorldCom is the fourth largest long-distance telecommunications operator in the U.S. and owns global Internet service provider UUNET Technologies, Inc.