PSINet Inc. (Nasdaq: PSIX), a commercial internet service provider, said Monday it has agreed to buy Transaction Network Services, Inc. (NYSE: TNI) in a deal valued near $720 million.
TNI shares closed at 34 1/4 Friday. Shares in PSINet closed at 45 9/16, below their 52-week high of 73 3/4. PSINet, headquartered in Herndon, VA, blew past estimates in its second quarter.
With the acquisition, PSINet is looking to be an e-commerce player. TNI, headquartered in Reston, Virginia, provides eCommerce data communications, processing more than 20 million transactions per day from 2 million businesses. The company handles over 70 percent of the electronic point of sale transactions in the U.S. During its quarter ended June 30, TNI reported revenue of $42.7 million, and a net profit of $3.1 million.
The deal is the "first combination of a market-leading eCommerce enterprise with a global facilities-based Internet service provider," said William L. Schrader, PSINet chairman and CEO in a company statement. Combining PSINet and TNI creates a leading global provider of eCommerce and Internet solutions to businesses worldwide, and enables PSINet to better access the $1 trillion marketplace for eCommerce services, he added.
The purchase price of $720 million includes $351 million in cash and up to 7.8 million PSINet common shares. TNI shareholders may elect to receive cash, PSINet stock, or both. The purchase of TNI is expected to be immediately accretive to PSINet's EBITDA and EPS measures. The transaction is expected to close in the fourth quarter of 1999.