Cable & Wireless to Buy Exodus Assets, Contracts

Cable & Wireless of Britain agreed to pay $850 million for a large part of bankrupt U.S. firm Exodus Communications, making it the top Web hosting firm but raising questions about its investment strategy.

The British telecom network and Internet services group said it will take over the U.S., Japanese and European customer contracts from Santa Clara, Calif.-based Exodus, together with some of its corporate and data center assets.

The purchase makes C&W; the world leader in Web-hosting services, with about a quarter of the market.

However, the industry has lost much of its sparkle in the aftermath of the dot-com bust.

C&W;’s American depositary receipts closed at $14.30, down 79 cents, in NYSE trading. Exodus closed unchanged at 10 cents in over-the-counter bulletin board trading. Exodus shares once traded as high as $89.81 on Nasdaq.