PSINet spokeswoman Tonya Corum said the company's
shareholder meeting still will be held as scheduled, and added
that, at this time, it is not known if the U.S. Internetworking
offer will be addressed. She added that PSINet will consider
all offers that it receives.
But David Takata, an analyst at Gruntal & Company, said
PSINet does not have much time to make a decision.
The ISP has been shopped around by Merrill Lynch for over a
year, and many potential buyers already have reviewed
PSINet's financial books, Takata said.
Takata said he has a price target of $15 a share for PSINet,
making today's offer weak compared to the company's
potential.
"A deal [with U.S. Internetworking or another suitor] is
inevitable in the next couple of days, unless IXC sweetens its
deal," said Takata, adding that it is unlikely IXC will up its
bid.
He explained that IXC does not need to increase its offer
because PSINet will still need a backbone. Consequently,
even if U.S. Internetworking buys the company, the former
PSINet likely would still need to do business with IXC, if not
with some other backbone provider.
Should the IXC-PSINet deal go through, however, any
long-distance telcos that had been interested in the ISP likely
no longer would be, because such companies already have a
backbone, Takata said.
"[U.S. Internetworking's offer] validates the strategic
importance of companies like PSINet, Digex, and AGIS (Apex
Global Information Systems). PSINet is one of the last big
tier-one backbone Internet providers," he added, noting that
the company is in a unique position to move a lot of traffic, and
as a result is a logical choice for big companies coming online.
"This makes their strategic value go up," Takata said. |
