Savvis buy moves Level 3 into content delivery

With five days left in 2006, Level 3 seemed to cap a busy year of acquiring companies with one final deal--a $135 million bid to buy Savvis' content distribution network assets, announced this morning.

The acquisition is Level 3's sixth M&A move of 2006, and eighth deal within the last 14 months. It is the first purchase among all those acquisitions to specifically target content delivery, though Level 3's acquisition of WilTel in the fall of 2005 did include that company's Vyvx video distribution subsidiary. Most of Level 3's previous deals have helped it bulk up on transport bandwidth and wholesale customers. The content delivery technology its gaining improves access to content at the network edge through a combination of caching, routing and streaming efficiencies.

A statement from Broomfield, Colo.-based Level 3 said the deal is expected to close in the first quarter of 2007. "The acquisition of Savvis' CDN services business will enable Level 3 to better address the increasing opportunity presented by rich media applications such as video, Web 2.0 applications, multiplayer online gaming and software as a service over the Internet," said Kevin O'Hara, president and chief operating officer of Level 3.

Savvis itself had acquired the Thousand Oaks, Calif.-based content delivery business just two years ago as part of the broader $200 million acquisition of Cable & Wireless Americas. The unit, which includes properties that once were the dot-com era juggernauts Digital Island and Sandpiper Networks, has about 50 employees and more than 100 customers. It was first reported by GigaOM back in October that St. Louis-based Savvis might be looking to sell its content delivery unit.