USWeb/CKS To Merge With Whittman-Hart

Internet consulting firms USWeb/CKS and Whittman-Hart today announced a merger agreement that will create an 8,000-person organization the companies say will be the largest purely Internet-focused professional-services firm.

Executives at the companies predict a boom in Internet consulting and say the deal, which is expected to be completed by April, will give them the needed scale to serve that demand. While Whittman-Hart has built its business working with fast-growing, middle-market companies, executives of the two companies say size and market distinctions are not important in the current business environment.

"The delineators--Fortune 500, middle market, B2B, bricks and mortar, dot com--have become irrelevant. The commonality among our client base is no longer size or market segment," said USWeb/CKS CEO Robert Shaw, who will be chairman of the new firm. "Our client base is much more defined by a desire to win, a sense of urgency, and a commitment to invest in a vision."

The stock-for-stock swap deal values the combined company at about $14 billion, based on Friday's closing price. The deal will leave USWeb/CKS shareholders owning 57% of the company and Whittman-Hart shareholders owning 43%.

The new company will provide what it calls "integrated digital services" in three broad areas: strategy, marketing and creative, and technology. It plans to continue developing application and managed services that give the firm ongoing revenue, rather than just one-time implementation.

Whittman-Hart CEO Robert Bernard will be CEO of the new company. Whittman-Hart CFO Bert Young and USWeb/CKS chief operating officer Robert Clarkson will retain their titles. The company will be headquartered in Chicago but will keep executive offices in San Francisco. It will have more than 70 offices in 13 countries.

Wall Street gave the news a chilly reception. In afternoon trading, Whittman-Hart's stock had plunged 22-5/8 to 56-5/8, while USWeb/CKS shares fell 4-9/16 to 46-5/16.

One analyst questioned the strategy behind the deal. Christine Ferrusi Ross, an analyst at Forrester Research, said USWeb/CKS and other rival E-business consulting groups have been acquiring through recent deals companies with a specific skill or technology strength to fill out their portfolios. Whittman-Hart does not offer an obvious synergy, Ross says. "What are they getting from Whittman-Hart that they didn't have already?" she said.