IP: Sandpiper/Digital Island merger

[Dave Farber <farber () cis upenn edu>]

> DIGITAL ISLAND TO MERGE WITH SANDPIPER NETWORKS'EXPANDING
> SERVICES FOR GLOBALIZING E-BUSINESS APPLICATIONS
>
> Industry Leaders Unite to Redefine Network Services for Deploying Successful
> e-Business Worldwide
>
>
> SAN FRANCISCO, CA --  October 25, 1999 -Digital Island, Inc. (NASDAQ: ISLD),
> a leading provider of network services for globalizing e-Business
> applications, announced today that it has agreed to merge with Sandpiper
> Networks, Inc., the leading provider of content delivery solutions for
> e-Business.
>
>  The combined company will integrate content delivery, hosting and
> intelligent network services to address the two significant requirements of
> global e-Business applications: support for centrally controlled and secure
> transactions and fast content delivery at the edges of the network.  In
> addition, the new entity will combine key intellectual property from both
> companies including Digital Island's TraceWare™ software and Sandpiper
> Networks' FootprintSM content delivery technologies to make Web experiences
> faster and more locally relevant.
>
>  "Providing the best possible Web-site experience is critical to building
> and retaining brand loyalty," Ruann F. Ernst, President and CEO of Digital
> Island said.  "Together, Digital Island and Sandpiper Networks will empower
> our customers to attract and grow their revenues by delivering excellent
> end-user experiences -- anywhere, anytime."
>
> "Digital Island and Sandpiper Networks share a common vision regarding the
> best possible way to distribute computing intelligence around the world and
> deliver the right experience to the ultimate user," Leo Spiegel, President
> and CEO of Sandpiper Networks said. "Now, we can even more effectively
> fulfill our vision by combining our world-class engineers, networks and
> technologies to better meet the needs of our global customers."
>
>  Upon completion of the merger, Digital Island's global intelligent network
> of five data centers that directly serve 21 countries will be integrated
> with Sandpiper Networks'  content delivery network consisting of over 1,200
> enterprise-class servers to create the first complete solution for Web-based
> marketing, sales, fulfillment and support applications worldwide.  Digital
> Island and Sandpiper Networks have already adopted the same
> industry-standard platforms for advanced edge-network architectures. Both
> companies have in common Inktomi®  caching and mirroring software,
> enterprise servers from Sun Microsystems®, Microsoft® and RealNetworks®
> software for streaming audio and video services, and Vignette® for
> publishing and content management applications.
>
> The combined entity will have more than 100 customers including E*Trade,
> Cisco Systems, Intuit, Novell, CNBC.com, Mastercard, Value America,
> Microsoft, and the Los Angeles Times.
>
>  "The merger of Digital Island and Sandpiper Networks is truly significant
> for global e-Business, said David Peterschmidt,  President and CEO of
> Inktomi Corporation. "We intend to work closely with the combined company to
> define the standards for improving global Internet performance and to
> develop the next generation of network services."
>
> "The merger of Digital Island and Sandpiper Networks raises the bar in the
> Internet industry from both a business and technological perspective," said
> Christos M. Cotsakos, Chairman, CEO and director of E*Trade Group, Inc. and
> a member of the board of directors of Digital Island.  "Each an innovator,
> they now have created a superb category of global network services that
> brings together world-class resources for conducting business on the
> Internet."
>
>         Pursuant to the terms of the merger, Sandpiper's shareholders will receive
> 1.07shares of Digital Island for each Sandpiper share, or a total of
> approximately 27 million shares on a fully converted basis of Digital
> Island.   The merger is subject to approval by shareholders of both parties
> and standard regulatory approvals. Officers, directors and certain
> affiliates holding over 50% of the voting power of Sandpiper Networks and
> 45% of the voting power of Digital Island have executed voting agreements in
> support of the transaction.
>
>  Ruann F. Ernst, currently President and CEO of Digital Island, will assume
> the CEO position in the combined company.  Leo Spiegel, currently President
> and CEO of Sandpiper Networks will become President.  Allan Leinwand, VP
> Engineering/CTO of Digital Island, will become VP of Internetwork
> Engineering and CTO.   Sandpiper Network Founders Dave Farber and Andrew
> Swart will assume the roles of Chief Scientist and VP of Software
> Engineering, respectively.  The combined company will be headquartered in
> San Francisco and will have sales offices, regional data centers, and
> operations facilities spanning eight countries.
>
> Digital Island® is a leading provider of network services for globalizing
> e-Business applications.  Digital Island serves companies that need to
> securely and consistently extend business-critical applications for
> marketing, selling, supporting, or distributing products via the Internet.
> Digital Island e-Network Services include global content distribution and
> hosting services, localization of the end user online experience and a
> reliable global Intelligent Network, all of which are designed to deliver
> the right content, to the right customer, in the right market, at the right
> time.  The Company has regional data centers in New York, Santa Clara,
> Honolulu, London and Hong Kong, connecting directly into 21 countries with
> Local Content Managers in more than 13 markets worldwide to provide the
> ubiquity and reach of the public Internet with the quality and functionality
> normally available only in a corporate wide-area network.
> www.digitalisland.net
>         Sandpiper Networks is the world's first Content Delivery service
> provider for the Internet.  Founded in 1996, Sandpiper Networks has built
> what it believes to be the largest and most comprehensive Content Delivery
> Network (CDN).  The company's initial service offering, FootprintSM , gives
> leading e-Businesses the power to deliver Web sites more effectively and
> profitably while significantly improving site performance.  Footprint is
> designed to ensure the delivery of fresh Web content of all types while
> providing management statistics that are vital to Web-centric businesses.
> www.sandpiper.net
>
> Completion of the merger is subject to customary conditions, including
> stockholder approvals and antitrust review.
> Important Notice
>
> DIGITAL ISLAND is a registered trademark of Digital Island, Inc.  All other
> trademarks are properties of their respective owners.
>
> This release may contain forward-looking statements that involve risks and
> uncertainties.  Important factors which could cause actual results to differ
> materially from those in the forward-looking statements, include but are not
> limited to: the companies' short operating history which makes it difficult
> to predict its future results of operations; each company's history of
> operating losses and expected future losses which could impede its or their
> combined ability to address the risks and difficulties encountered by
> companies in new and rapidly evolving markets; each company's future
> operating results could fluctuate which may cause volatility or a decline in
> the price of the Digital Island's stock; each company may not be able to
> price its services above the overall cost of bandwidth causing its financial
> results to suffer; common or unforeseen difficulties in completing the merge
> or in integrating the combined companies' management, personnel, operations
> and businesses; and other factors detailed in Digital Island's  filings with
> the Securities and Exchange Commission including its recent filing on Form
> S-1.
>
> ###
> Contact at DIGITAL ISLAND:      Investor Relations contact for
> DIGITAL ISLAND:
> Irwin Greenstein                                    Kate Rajeck/Christine Belonogoff
> 415/738-4162                                    415/986-1591
> irwin () digitalisland net                 krajeck () frb bsmsg com
>
>
> Contact for SANDPIPER NETWORKS:
> Michelle Balconi
> 858/457-4888 ext. 132
> mbalconi () townsendagency com