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CrystalTech Merging With Interland, Inc.
(An old April Fool's joke played on CT mailing list subscribers)

By Michael Kanellos
Staff Writer, CNET News.com
April 1, 2003, 12:59 PM PT

Interland (NASDAQ: ILND) today announced that the boards of directors for both companies have approved a definitive merger agreement. The combination of Interland and CrystalTech creates a leading provider of business-class hosting solutions to the small and medium enterprise (SME) market, with the broadest portfolio of managed hosting and value-added services in the industry.

The combined hosting company will be named Interland, and will be headquartered in Atlanta. Together, the companies currently have six data centers, 112,000 customers, and more than 227,000 paid hosted Web sites.

"Today's announcement marks a major step toward completion of a process we began more than two years ago to transform CrystalTech from a small business web host to a world-class company," said CrystalTech Chairman and Chief Executive Officer Tim Uzzanti. "Hosting will serve as the foundation for many opportunities as SMEs increasingly outsource IT. This merger strategically positions us to take advantage of all the aspects of the Third Wave of computing, as the real power of computing moves from the desktop to the network."

Interland Chief Executive Officer Ken Gavranovic said, "Combining forces with CrystalTech is clearly a win for both companies, securing our spot among the leaders moving forward, as consolidation in the hosting market continues to take flight. We will now have the necessary financial means to execute our strategy with a fully funded business model as well as additional cash resources -- a rare find among most hosting providers today. Together, we can deliver a wide range of e-business processes to SMEs through one of the most diversified and expanded portfolios of managed hosting and value-added services in the industry."

Merger Terms

The transaction will be accounted for under purchase accounting, and will be tax-free to Interland's shareholders. Under the agreement, Interland will acquire CrystalTech in an all-stock deal giving Interland shareholders approximately an 80% interest in the new company, subject to adjustment at closing under certain circumstances. Based on the closing price of Interland stock on March 28, 2003, the deal is valued at approximately $130 million.

Merger Synergies

Management expects pro forma revenues for fiscal year 2004 (ending August 31, 2004) of $160 million to $180 million. The companies expect to realize approximately $20 million to $30 million in total cost synergies in the first year. And management intends to reach EBITDA breakeven by the second quarter of fiscal year 2004, and cash flow positive three quarters later.

The CrystalTech/Interland combination will:

  • Provide the most complete portfolio of hosting services in the industry, with the most hosted collaboration applications, database server and e-commerce applications, data transfer, email communications services, server extensions and professional services across the board.
  • Have more managed dedicated customer accounts than any other hosting provider.
  • Be the third largest hosting company in the U.S. based on number of hosted Web sites.
  • Provide business-class hosting services to more small and medium business customers, through both direct and partner channels, than any hosting company in the world.

About CrystalTech

CrystalTech is a debt-free, privately owned corporation, dedicated to helping businesses increase their presence online through scalable web hosting and e-commerce solutions. Founded in September 1992, CrystalTech has grown from a 2 person operation to a corporation supporting THOUSANDS of business and individuals in over 50 countries. We serve individuals, small businesses, and fortune 100 corporations. With a growth rate of 15% per month, we will continue to grow and become a leader in Web hosting and Internet commerce. With low prices, multiple account features, and incentives for resellers and referrals CrystalTech can offer you the tools and support to help your business succeed with us in the future.

About Interland

Interland, Inc. is a leader in providing managed Web hosting services for over 86,000 Web sites around the world. According to International Data Corporation (IDC), Interland is the sixth largest hosting company in terms of total customer accounts. As one of the leading hosting companies in the rapidly growing $24.8 billion hosting market, Interland provides a full spectrum of managed hosting services, including system monitoring and reporting, managed backup and recovery, and system administration services, as well as e-commerce solutions, Web design, and business applications hosting.

Interland's hosting services are based primarily on the Microsoft NT, Windows 2000 and Red Hat Linux operating systems, providing flexible options to its customers. In September, the company was recognized for hosting the largest number of active Windows 2000 Web sites in the world. Interland has made a number of significant investments in technology for the benefit of its customers including: a Veritas backup and recovery system, Micromuse's Netcool to manage the core network operations, BMC Patrol and Business Bridge. Strategic partners include Microsoft, VeriSign and Verizon.

Except for the historical information contained in this press release, statements in this press release may be considered forward-looking statements. These forward-looking statements include the expected effects of the merger of CrystalTech and Interland (such as the establishment of the combined company as a leading provider of web hosting solutions and certain merger synergies and expected future operating results for the combined company) and the timing of the expected closing of the merger. Actual results may differ materially from those contained in the forward-looking statements in this press release. Factors which could affect these forward-looking statements include but are not limited to: the ability to achieve expected operating efficiencies in connection with merger, risks associated with integrating newly acquired technologies and products and unanticipated costs of such integration, the ability of the combined company to expand its customer base as planned, general economic conditions, failure of the transaction to close due to the failure to obtain regulatory approvals, the impact of competition, quarterly fluctuations of operating results, customer acceptance of new products and services and new versions of existing products, the risk of delay in product development and release dates, risks of product returns and investments in new business opportunities. Certain of these and other risks associated with Interland's business are discussed in more detail in its public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release

WHERE YOU CAN FIND ADDITIONAL INFORMATION:

Investors and security holders of Interland are advised to read the prospectus/proxy statement regarding the merger, when it becomes available, because it will contain important information. Interland expects to mail a prospectus/proxy statement about the merger to their respective stockholders. Such proxy statement/prospectus will be filed with the Securities and Exchange Commission by both companies. Investors and security holders may obtain a free copy of the prospectus/proxy statement (when available) as well as the annual report, quarterly reports, current reports and other documents filed by the companies at the Securities and Exchange Commission's web sit at http://www.sec.gov. The prospectus/proxy statement and such other documents may also be obtained free of charge from CrystalTech or Interland.

Interland and its officers and directors may be deemed to be participants in the solicitation of proxies from stockholders of CrystalTech and Interland with respect to the transactions contemplated by the merger agreement. Information regarding such officers and directors is included in Interland's Registration Statement on Form S-1, originally filed with the Securities and Exchange Commission on March 15, 2003, as amended from time to time thereafter, and a description of any interests that they have in the merger will be available in the prospectus/proxy statement. The Registration Statement on Form S-1, as amended, is, and the prospectus/proxy statement will be, available free of charge at the Securities and Exchange Commission's Web site at http://www.sec.gov and from Interland. A press/analyst conference was held to discuss the announcement, Friday, March 28, 9:00 a.m. EST. A live audio webcast is available via Yahoo! broadcast.com http://www.nasdaq.com (symbol "MUEI")

Contacts:

Interland Investor Relations:
Nancy de Jonge
404-557-2612

Interland Media Relations:
Sara Stutzenstein
678-898-3788

CrystalTech Media Relations:
877-279-7932


And, oh yes... April Fool's.


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