EarthLink To Buy VPN Provider - InformationWeek

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EarthLink To Buy VPN Provider

The $144 million deal for New Edge Networks is expected to expand Earthlink's offerings for smaller customers.

EarthLink Inc. on Tuesday said it has agreed to acquire privately held New Edge Networks, a national provider of virtual private networks, for $144 million in stock and cash.

The purchase is expected to expand the Atlanta-based Internet service provider's offerings for small and medium-sized businesses. New Edge, based in Vancouver, Wash., has one of the largest data communications networks in the nation, with a customer base that's expected to generate about $120 million in revenues this year, EarthLink said.

Under the agreement, EarthLink would acquire 100 percent of New Edge in a merger transaction valued at about $144 million in cash and Earthlink stock. The acquisition, which is subject to regulatory approvals and customary closing conditions, is expected to close in the first quarter of 2006.

"New Edge Networks is a tremendous growth platform for EarthLink to compete in the rapidly expanding SME (small to medium enterprise) networking market," Bill Heys, president of EarthLink's SME business unit, said in a statement.

EarthLink plans to use New Edge's products in packaging voice, data, and security tools for broadband and VPN services for small office and home office users, as well as small and medium enterprise customers.

EarthLink plans to retain New Edge's 345 employees and its brand, operating the company as a wholly owned subsidiary of EarthLink. New Edge is expected to continue to be based in Vancouver, Wash., with Dan Moffat remaining as president.

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