CNCX gapping on acquisition of British ISP : biz.yahoo.com
FOCUS-Concentric to buy tech firm ITG for $235 mln
By Michael Steen
LONDON, Sept 8 (Reuters) - California-based Concentric Network Corporation (Nasdaq:CNCX - news) is to buy Britain's Internet Technology Group Plc (quote from Yahoo! UK & Ireland: ITH.L) in the biggest British Internet service provider takeover ever, the companies said on Wednesday.
The deal values ITG at 146 million pounds ($235 million), pricing shares at 253 pence each. The new company will provide Internet access to residential and business customers across Europe and the United States.
``Our networks mesh very nicely, but there's more to build and it is a very extensive process,' ITG Chief Executive Laurence Blackall told Reuters.
The two companies both own high speed networks linking major European and U.S. cities, unlike many lower-tier Internet service providers who hire much of their network capacity.
Concentric's Vice President for Business Development, James Isaacs, said the company had considered building up its own presence in Europe, but opted for the quicker route of buying an existing player.
``We considered going our own way, but figured the race would be over before we could build up an operation,' he said.
Asked if Concentric was planning any further acquisitions in Europe, Isaacs said: ``We have a long-term desire to have a presence in Europe.'
Microsoft Corp. (Nasdaq:MSFT - news) agreed to invest $50 million in Concentric at the end of June and has a contract with the company to carry traffic for its Web TV domestic Internet service.
If Microsoft were to launch Web TV in Europe, Isaacs did not rule out a deal for Concentric to provide access there.
``I think it would be a great way for Concentric and Microsoft to work together (in Europe) ... but it's speculative at this point,' he said.
ITG's Blackall, who will head up Concentric's European operations, said Concentric's offer was generous.
``It's actually more than twice what anyone else has ever paid for an ISP (in Britain),' he said. Energis Plc (quote from Yahoo! UK & Ireland: EGS.L) bought Planet Online for 75 million pounds in August 1998 and Scottish Telecom (quote from Yahoo! UK & Ireland: SPW.L) bought Demon Internet for 66 million pounds in April 1998.
Isaacs declined to comment on whether Concentric had plans to raise money for capital-intensive network-building in Europe or America.
Concentric is offering 117.50 pounds in cash and 8.391 new Concentric shares for each 100 ITG shares, plus an additional cash payment of 17p per ITG share.
The companies said the deal should be completed before 2000 |
