360networks to acquire NetRail

(Telephony) Broadband network services provider 360networks announced today that it plans to acquire IP service provider NetRail in an all-stock transaction valued at $50 million.

Specific terms of the deal were not disclosed, but 360networks said it expects the deal—which must be approved by the FCC and company shareholders—to close during the second quarter of this year.

If approved, 360networks will gain access to Atlanta-based NetRail’s 20,000-mile network and more than 50 points of presence across the U.S.

“This acquisition accelerates our entry into the IP services market due to NetRail’s established peering arrangements with all other Tier 1 Internet backbones,” said 360networks CEO Greg Maffei in a prepared statement. “In addition, we will have access to a robust suite of IP products and services, more than 150 customers and an exceptional employee group with proven salespeople and experienced IP network engineers.”

A spokeswoman at 360networks said that it was too early to say whether the acquisition would impact NetRail’s 130 employees, but that the company’s intention is to keep the “vast majority.”

The acquisition fits indirectly into Vancouver-based 360networks’ plan to develop a fiber optic network covering 89,000 miles around the globe. The company hopes to link more than 100 major cities worldwide by mid-2002, via cables that would connect North and South America, Asia and Europe.

The spokeswoman said that although 360networks will likely replace NetRail’s leased network with its own network over time, the acquisition is not completely unrelated to the company’s long-term goals.

“It [the acquisition] doesn’t necessarily extend our network, but it does allow us to enter the IP market that much sooner,” the spokeswoman said. “From a network expansion standpoint it’s not hugely significant, but it is significant in terms of services and people.”

The spokeswoman added that the company’s expansion plan is on schedule and on budget.

360networks’ fourth quarter and year-end earnings call is scheduled for Feb. 28.