After spending the last four years advising companies on how to expand their Internet business, USWeb/CKS (Nasdaq: USWB) put its money where its mouth is Friday. The company announced that it would pay over $300 million (US$) in stock for a top consulting company.
The San Francisco-based Internet professional services company said it agreed to issue 14.4 million shares of its stock to acquire the Mitchell Madison Group, a top-tier consulting company which counts a number of Fortune 500 companies as clients. USWeb/CKS was trading at over $21 at the close of trading Thursday.
The move gives USWeb/CKS an instant added value, transforming it from a primarily front and back-end provider to an Internet services boutique with top-end consulting services.
“We’ve done an excellent job growing our strategy organization over the past six months, but this move catapults USWeb/CKS forward,” said company CEO, Robert Shaw. “The acquisition of the Mitchell Madison Group launches us beyond market leadership to redefining the Internet professional services market.”
Growing By Leaps and Bounds
The acquisition will further propel the company’s own growth. Earlier this month USWeb/CKS said it was the first Internet professional services company to reach quarterly revenues of $100 million, logging in at $101 million for the second quarter of 1999.
With a client list that is 3,000 strong and includes 46 of the Fortune 500, USWeb/CKS has already put a sizeable dent in the market share. The company has recently built an online pharmacy for Walgreen, an e-commerce platform for Williams Sonoma, completed Internet-based data warehousing for 20th Century Fox and did site redesigns for AOL, AskJeeves and others.
USWeb/CKS merged in 1998 in a $540 million deal. Since then, the company has been on a tier. It has opened offices across Europe and now has some 40 offices in 10 countries with nearly 3000 employees.
The Mitchell Madison deal, if approved by regulators and USWeb/CKS shareholders, will add quite a bit of cache to that lineup. Mitchell Madison is a 550-consultant strong firm that was founded in 1994 by 30 former McKinsey & Co. employees.
Its worldwide roster of clients include seven of the top 10 commercial banks, seven of the top 10 communications companies, six of the top 10 investment banks and securities companies and five of the top 10 European industrial companies.
The company has solid experience with e-commerce issues and has worked extensively on sourcing and supply chain transformation, global payment systems and electronic trading networks, USWeb/CKS said.