Concentric goes continental: Bid for English ISP opens European strategy

Hoping to formalize its entry into the European market, Concentric Network is attempting to acquire one of the U.K.'s largest independent ISPs, Internet Technology Group, in a half-stock, half-cash transaction worth $215 million.

The companies have had a strategic relationship since September 1998, with ITG carrying traffic over its U.K. frame relay backbone and trans-Atlantic connection in return for access to Concentric's U.S. ATM network. ITG also has partnerships for U.S. service with Verio and TCG/CERFnet.

"ITG will be the cornerstone of a European expansion strategy for Concentric," said James Isaacs, Concentric's vice president for business development.

Time-to-market explains Concentric's decision to buy, not build. "We could spend $100 million building our own network, another $100 million building a brand in Europe and hiring people, and 18 months from now we might be approaching the run rate that ITG's at right now," Isaacs said.

"This is a good fit and a strong platform for launching the Concentric brand into the rest of Europe," said Tina Reiver, senior analyst with investment firm Wittman & Pulke.

ITG has been in the midst of its own continental expansion. Last January the company purchased Internet Facilities Europe, an Amsterdam-based ISP. In July it signed contracts for a network that links Amsterdam; Frankfurt, Germany; London; and Paris.