RDG Capital Recommends Internap Explore A Potential Sale Or Merger To Maximize Shareholder Value

RDG Capital Fund Management ("RDG"), a significant shareholder of Internap Corporation ("Internap" or the "Company")

, announced today it has delivered a letter to the Company's Board of Directors (the "Board"). The letter notes that despite continuing operational improvements and recent share price appreciation, RDG believes Internap remains significantly undervalued compared to its estimated private market value of $16 - $19 per share. To remedy the Company's undervaluation, RDG strongly recommends the Board retain a nationally recognized investment banking advisor to explore strategic alternatives to maximize shareholder value, including a potential sale or merger. Based on discussions with leading technology sector M&A investment bankers, RDG believes there are likely a number of potential strategic buyers who would be interested in acquiring Internap at a significant premium to its recent trading valuation. Whereas comparable data center companies trade at an average 6.4x 2015E revenue and 14.3x 2015E EBITDA, RDG notes that Internap trades at just 2.6x 2015E revenue and 9.9x 2015E EBITDA, representing the lowest valuation multiples in its peer group, notwithstanding the Company having a projected EBITDA growth rate similar to its peers. Furthermore, RDG notes that recently announced data center industry M&A transactions such as Zayo Group's acquisition of Latisys Corporation at 15.3x LTM EBITDA and Telecity Group's acquisition of Interxion Holding NV at 16.4x LTM EBITDA reflect a highly favorable M&A market environment in which data center acquirers are willing to pay attractive valuation multiples. As a leading operator of company-controlled data centers providing hybrid services to high performance-dependent customers, RDG believes Internap would be attractive to many potential strategic acquirers looking to extend their service offerings, expand their geographic coverage, and improve their operational efficiency through consolidation. RDG has identified in its letter numerous potential acquirers that it believes could realize significant one-time accelerated capacity utilization benefits of $100 million and substantial cost savings and cross-selling synergies in excess of $60 million annually. Based on data center industry M&A valuation multiples and discussions it has held with leading technology sector M&A investment bankers, RDG estimates the private market value of Internap in a merger or sale would be $16 -- $19 per share.