Reuters, 12/8/2000 16:11
UPDATE 1-NorthPoint sues Verizon over nixed merger deal
(Adds details, paragraphs 5, 8-10)
NEW YORK, Dec 8 (Reuters) - Internet access company NorthPoint Communications Group Inc. (NASDAQ:NPNT) said on Friday it sued its former partner Verizon Communications over the termination of their merger agreement in a move to salvage the deal or get $1 billion in damages.
Verizon (NYSE:VZ), the No. 1 U.S. local telephone company, last month canceled an $800 million agreement to buy a 55-percent stake in NorthPoint and merge the companies' digital subscriber line (DSL) businesses. DSL technology provides high-speed Internet access over copper telephone wires.
The deal's termination came after NorthPoint restated its third-quarter financial results and revealed that some of its customers couldn't pay for services they had already received.
In the lawsuit, which was widely expected, NorthPoint alleged the merger agreement did not give Verizon the legal right to call off the deal. It also charged that Verizon nixed the deal in an effort to avoid its financial obligations to NorthPoint and, therefore, increase its near-term stock price.
Verizon's stock has climbed 3 percent since it terminated the NorthPoint deal on Nov. 29. NorthPoint's stock has fallen 80 percent over the same period.
"We intend to pursue this matter completely to ensure that Verizon either closes the deal with NorthPoint or that NorthPoint receives the full compensation and benefits to which it is entitled under law and the merger agreement," said NorthPoint Chief Executive Liz Fetter.
Verizon said it believes it was within its right, under the merger agreement, to terminate the deal due to the "material adverse change" in NorthPoint's finances.
"We did it for one reason and one reason only and that was the deterioration of their business," said Verizon spokesman Peter Thonis, adding Verizon had not yet seen a copy of NorthPoint's complaint, which was filed in California Superior Court for the city and county of San Francisco.
Verizon has previously sued NorthPoint in Delaware. Its Nov. 29 complaint seeks a judgment that it had no obligation to complete the deal or provide NorthPoint with additional financing.
Shares of Verizon traded at $56-1/16, down $1-13/16, on the New York Stock Exchange. Shares of NorthPoint were unchanged at 13/32 on Nasdaq.
Copyright 2000, Reuters News Service |
