Covad Communications (Nasdaq: COVD) said Thursday it will buy LaserLink.net, a provider of branded Internet access, in a deal worth about $387 million that will deliver complete broadband Internet services to its customers through company-branded access.
Shares in Covad, a broadband services provider that uses DSL (digital subscriber line) technology, closed at 90 1/4 Wednesday. Its stock has been steadily rising, and the company posted a smaller-than-expected loss in its fourth quarter.
The acquisition will allow Covad to provide broadband access to companies that want to build their brand strength. It will also increase services available to the company's existing ISPs (Internet service providers) and expand the number of channel partners that sell its broadband access service. LaserLink.net currently serves markets such as personal computer manufacturers, financial services, education and entertainment groups, as well as ISPs.
Under the deal, Covad will issue 4.3 million pre-split shares of Covad stock for all LaserLink.net shares and outstanding debt. Both companies' boards of directors have approved the transaction, valued at about $387 million as of yesterday's closing price of Covad common stock.
LaserLink.net will operate as a separate business unit, with George McGovern, chairman and CEO of LaserLink.net, heading the unit and reporting to Robert E. Knowling Jr., Covad's chairman, president and CEO.