Shares of Verio Inc. (Nasdaq: VRIO) soared Monday on news that the company is being acquired by Japanese company NTT Communications Corp., a unit of Nippon Telegraph and Telephone Corp., (NYSE: NTT) for about $5.5 billion.
In early trading, Verio was up 22 3/8 to 55 5/16. Verio competitor PSINet (Nasdaq: PSIX) rose 3 1/4 to 25 3/8 in heavy trading. Exodus Communications (Nasdaq: EXDS) was up 4 to 89 3/4.
NTT, which had already owned 10 percent of the Web-hosting and Internet services company, will acquire all of its shares at $60 apiece. Verio surged in aftermarket trading, but has fallen sharply from its high of 84 15/16 in March, despite topping estimates in its fourth quarter.
The transaction, which values Verio at around $5.5 billion, excludes about $500 million attributable to NTT Communications' current shareholdings in Verio.
The acquisition will combine NTT's global network services and IP-based services in Asia with Verio's Tier One Internet backbone network in the U.S.
NTT said the acquisition of Verio will help it expand business in the U.S. by offering 'one-network' IP services under a single-policy operating structure. The deal should also facilitate investments and development for new global IP services such as IP-VPN and global Web content caching, the companies said.
The deal's advantages to Verio include the a rapid expansion of its client base in the U.S. and Asia markets. A strong prescence in Pan-Pacific areas will also allow Verio and NTT to expand into Europe more effectively, the companies said.
No change in Verio's management is anticipated, and Verio will retain its name. The deal is expected to be completed in the third quarter of 2000.