Tuesday May 6 8:15 AM EDT
GTE to buy BBN Corp , sets Cisco alliance
NEW YORK, May 6 (Reuter) - In a move to expand beyond its local phone service, GTE Corp
said it will buy Internet service provider BBN Corp for $616 million and set a strategic alliance with
Cisco Systems Inc to develop enhanced data and internet services.
GTE said it will pay $29 a share, giving BBN shareholders a 28 percent premium over their
Monday close on the New York Stock Exchange of 22-5/8.
GTE will also buy a coast-to-coast fiber optic network and create a new, deregulated unit to
market integrated voice, video and data solutions. The moves are aimed at positioning GTE as a
"market-leading national provider of integrated telecommunications services."
Under the terms of the BBN acquisition, which has been approved by the boards of both
companies, GTE will start a cash tender offer for BBN "shortly."
Cambridge, Mass.-based BBN provides high performance end-to-end Internet solutions such as
World Wide Web site hosting, network security, consulting, systems integration, and dedicated and
dial-up Internet access for government and commercial customers.
The acquisition will "jump-start" GTE's chances of winning contracts to provide enhanced Internet
services market for large businesses, GTE said.
GTE's pact with networking powerhouse Cisco will develop GTE's network and deliver bundled
solutions of applications, equipment installation, maintenance and telecommunication services. In a
separate statement released jointly with Cisco, GTE said its purchases of Cisco products for resale
could reach over $1 billion.
All the moves are aimed at making GTE a "national 'one-stop' provider of local, long distance,
Internet and wireless services, and will establish an advanced data network that will be fully
operational next year," said GTE President Kent Foster in a statement.
"At that point, we will be in a position to reach virtually the entire U.S. population," Foster said said.
GTE will also build a fiber optic network that stretches from coast to coast to be completed in 1998
through the acquisition of 24 "dark fibers" from Qwest Communications Corp. Qwest has filed for
an initial public stock offering.
"GTE's network will greatly reduce the high upfront costy of today's private data networks, making
advanced data communications more affordable for a greater segment of the populations," GTE
said.
GTE said it will also set up an unregulated sales, service and marketing unit to offer an integrated
package of local, long distance, Internet and wireless services nationwide, regardless of GTE's
traditional market boundaries.
The new unit will operate as a competitive local exchange carrier (CLEC). Lew Wilks has been
named president of the new units. He was previously president of business markets. |
