IXL stock dropped 47% to 53 cents from a $1.Scient stock was down slightly, closing at 54 cents, down 1 cent.
IXL and Scient agreed to merge and become subsidiaries of a New York-based parent company to operate under the Scient name. Bob Howe, chairman-CEO of Scient, will be chairman of the new company, while iXL Chairman Bert Ellis becomes vice chairman of Scient. Chris Formant, who joined iXL as CEO last year, becomes CEO of the new company. The transaction is expected to close in the fourth quarter.
The consolidation comes as the once-hot e-consulting category struggles to regroup. Scient has cut a total of 897 jobs this year, more than half its staff, while iXL starting laying off employees last September, including 300 jobs in May. It now has approximately 1,000 employees and has closed 12 of its 23 offices during the course of its restructuring.
IXL recorded a net loss of $51.9 million, or 54 cents per share, as compared with a net loss of $28.5 million, or 38 cents per share, for the same period last year. The company also experienced a steep drop in revenue, from $118.4 million in the second quarter of 2000 to $32.7 million for the second quarter of this year.
Scient, which moved its headquarters to New York earlier this year, reported a net loss of $66.3 million, or 94 cents per basic share as compared with net income of $5.8 million or 9 cents per basic share for the second quarter of 2000. Its revenue dropped from $91.4million during the second quarter of 2000, to just $11.3 million during this quarter.
First Union Securities and Credit Suisse First Boston Corporation acted as financial advisers to iXL, while Thomas Weisel Partners and Morgan Stanley acted as financial advisers to Scient. Under the terms of the deal, each share of iXL and Scient common stock outstanding prior to the merger will be converted into the right to receive 25 cents and 31 cents a share, respectively, of the new holding company's common stock. -- Catherine P. Taylor and Adrienne Mand
Copyright July 2001, Crain Communications Inc.