AOL to finally get CIS's online service in mega-deal

The ISP market will this morning be turned on its head.

In a complex deal, WorldCom Inc. will buy the whole of CompuServe in a deal worth close to $1.2 billion in stock. It will then buy America Online's communications network in a deal that gives America Online CompuServe's online service plus $200m cash in return.

America Online had talked to CompuServe in July but acquisition talks broke down and CompuServe has since been linked with other potential partners. WorldCom, which owns UUNet and MFS, had $1.77 billion in revenues for its most recent quarter.

America Online is expected to outsource its often-maligned network operations to WorldCom.

"Now thay can outsource to someone else and let them take the heat... it's pretty smart," said Mark Li, technical director of European operations at Internet search service Yahoo!