NTT Comms to buy Verio for $5.5 billion

NTT Comms to buy Verio for $5.5 billion

TOKYO (Reuters): NTT Communications, a unit of Japan's former
state monopoly NTT Corp, will buy U.S. Internet service provider
Verio Inc for US$5.5 billion, after the U.S. government gave the
go-ahead a week ago.

NTT Communications said on Thursday it completed its tender
offer and, combined with the shares it already owns, would take
control of about 95.6 percent of the outstanding shares of
Verio's common stock.

"What I believe is important is that we develop this (deal)
into something that will bear fruit," NTT Communications
president Masanobu Suzuki told reporters.

The acquisition -- one of the biggest Internet plays this year
-- is expected to close by the end of September.

The nearly four-month long deal had attracted intense scrutiny
from Washington due to worries it could present a foreign
espionage risk by giving state-controlled NTT access to U.S.
wiretapping activities.

The deal gives NTT Communications much-needed expertise on
web-site hosting and infrastructure, and will give it an edge in
the development of Japan's Internet economy.

The Japanese company, which operates mainly as a long-distance
carrier, had already launched a web-hosting service powered by
Verio in late June.

The company said it will immediately offer a complete range of
IP infrastructure and Web-based services in the U.S., Japan, and
Asia. In addition, it declared in a statement that it will extend
its presence to Europe.

Verio's chief executive Justin Jaschke will remain in place,
although the Colorado-based company's board of directors will be
comprised of a majority of NTT Communications representatives.

When the deal was announced on May 8, NTT Communications'
offer to buy for each of Verio's common stock for $60 was a 67
percent premium over its market price.

The acquisition was announced after the end of Tokyo trading
hours, and NTT's shares had closed at 1.27 million yen, down 2.3
percent, mainly due to a knee-jerk reaction to news that it will
cut telephone calling rates.

The deal is being watched closely as a precedent for other
Internet and telecoms deals, including possible hurdles that
Germany's state-controlled Deutsche Telekom AG may face to its
planned purchase of U.S. mobile operator VoiceStream Wireless
Corp in a $48 billion deal.