Nextlink Communications Inc. and Concentric Network Corp. entered into a $2.9 billion merger agreement to create a new broadband communications company providing a variety of voice, data and Internet services, the companies announced.
“The capabilities of the two companies will result in a differentiated service offering to the small and medium business customers that both Nextlink and Concentric have already had success reaching in the past few years,” said Nextlink Chairman and Chief Executive Officer Dan Akerson.
“We will have a very strong product set and a distribution network of both direct sales representatives and agents that will all be aimed at many of the largest and fastest-growing customer segments in the business arena,” he said.
Under terms of the agreement, each share of Concentric common stock will be exchanged for $45 of Nextlink common stock. The actual number of Nextlink shares to be exchanged for each Concentric share will be based on the 20-day average trading prices of Nextlink stock, prior to closing.
Based on Nextlink’s Jan. 7 closing price of $78.50, the ratio would be 0.573 Nextlink shares per Concentric share, the companies said.
Nextlink-58-percent owned by Craig McCaw as of Nov. 30-provides nationwide broadband communications services over fiber optic and broadband wireless facilities, and Concentric Network provides Internet solutions for small and medium-sized enterprises, including digital subscriber line access, Web hosting and e-commerce.
Together, the companies will have exclusive rights to a 16,000-mile high-speed fiber optic network and hold fixed wireless spectrum licenses covering 95 percent of the population in the top 30 markets in the United States. Currently, Nextlink’s data is carried by PSINet Inc.
Nextlink predicts the combined customer base will total more than 150,000.
The deal is expected to close in the second quarter, the companies said.
Unrelated to the merger, Mark Gunning, Nextlink’s chief financial officer, resigned due to personal reasons. William Hoglund, a member of Nextel’s board of directors, will serve as interim CFO.
