[WSJ: Nextlink to Buy Concentric Network For $2.9 Billion in Stock Transaction]
Nextlink Communications Inc., a fast-growing telephone company, is expected to announce plans to acquire Internet-access provider Concentric Network Corp. for about $2.9 billion in stock, according to people close to the transaction.
The deal would give Nextlink, based in McLean, Va., the ability to provide high-speed Internet access and other data services to its customers. Nextlink serves mainly small- to medium-size businesses, which often prefer to buy all of their communications services, including Internet access, from a single vendor.
A Nextlink spokesman declined to comment. A spokeswoman for Concentric also declined to comment.
Under terms of the acquisition, which the companies are expected to announce Monday, Concentric shareholders will receive $45 in Nextlink stock for each share, a 50% premium to the stock's price. At 4 p.m. Friday, Concentric closed at $30, up $1.75, or 6.2%, in Nasdaq Stock Market trading, where Nextlink rose $4.625, or 6.3%, to close at $71.50.
The Nextlink-Concentric transaction is the latest combination of a phone carrier and an Internet company. Last week, McLeodUSA Inc., a competitive local phone company, agreed to acquire Splitrock Services Inc. for about $1.75 billion.
If Nextlink shares rise above $90.91 a share, Concentric shareholders will receive 0.495 share of Nextlink stock for each Concentric share. If Nextlink stock falls below $69.23, Concentric shareholders will receive 0.65 share of Nextlink.
Nextlink, backed by cellular pioneer Craig McCaw, has been assembling a variety of assets in a bid to provide smaller business customers with a full suite of communications services. The company sells local phone service via fiber-optic networks in dozens of markets in the U.S. in competition with the Bell telephone companies.
Nextlink also owns wireless licenses that it aims to use for delivery of broadband services. And Nextlink, though a venture with upstart Level 3 Communications, has access to a long-distance network.
Concentric, based in San Jose, Calif., deepens Nextlink's ability to offer data services to customers. Concentric, like Nextlink, has focused on serving small- to medium-size businesses. The company offers high-speed Internet access through traditional phone lines, a service known as digital subscriber line, or DSL. It also provides Web hosting and networking services.
Concentric also has reached an agreement to acquire Internet Technology Group PLC, an Internet-access company in the United Kingdom. This purchase will help extend Nextlink's presence outside the U.S.
Analysts believe there will be further consolidation among competitive local exchange carriers, also known as CLECs. Nextlink and McLeodUSA, for now, are two of the most well-financed companies in the sector: Both companies recently attracted large investments from buyout firm Forstmann Little & Co. |
