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Sprint, EarthLink in swap
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February 11, 1998: 7:33 a.m. ET
Sprint to give Internet customers to EarthLink in return for 30 pct. stake
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NEW YORK (CNNfn) - Sprint Corp. will get a 30 percent stake in Internet service provider EarthLink Network Inc. in a broad-based alliance announced Wednesday.
Under terms of the deal, EarthLink will obtain Sprint's Internet Passport customer base, approximately $24 million in cash, $100 million in convertible debt financing, and a five-year commitment to deliver at least 150,000 new customers annually.
EarthLink will also receive preferential access to Sprint's data network.
For its part, Sprint (FON) will get 4.1 million preferred shares of EarthLink and will also buy 1.25 million shares of EarthLink's common stock (ELNK) at $45 per share. EarthLink shares closed at 38-5/8 Tuesday.
Sprint, a long-distance phone service provider, will then have a 10 percent voting stake and 30 percent economic stake in EarthLink.
The Westwood, Kansas-based Sprint said it was looking to build brand recognition for its Internet services by acquiring an interest in a known player.
EarthLink, headquartered in Pasadena, Calif., will continue to manage its Internet operations, including customer service and technical support. The addition of Internet Passport, which is Sprint's ISP, will increase EarthLink's customer base by 25 percent to a total of approximately 600,000.
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