Corvis Buys CLEC for $210M
Corvis Corp. (Nasdaq: CORV) has added to its carrier business with the acquisition for $210 million of U.S. national competitive operator Focal Communications Corp. (Nasdaq: FCOM) (see Corvis Buys Focal Communications).
The deal, which involves the issue of $101 million in new Corvis stock to Focal's shareholders and "the assumption or payment of approximately $109 million of Focal's existing debt and other long-term capital lease obligations," will not come as a shock. Corvis was on the hunt for a carrier that would help expand the market and cut the access costs of its existing subsidiary long-haul carrier Broadwing Communications LLC (see Corvis Gets Ready to Pounce).
"Focal will help us expand our nationwide network footprint and reduce our access costs," said Corvis CEO David Huber in a prepared statement. "They will also help add valuable customers and revenue without putting undue stress on our balance sheet." Corvis expects to close the acquisition in the third quarter.
Focal provides voice and data services to business customers, resellers, and other CLECs. It expects to report 2003 revenues of about $320 million.
Corvis had originally been interested in bankrupt operator Allegiance Telecom Inc., but dropped out of the reckoning before an auction that saw XO Communications Inc. (OTC: XOXO) expand its business (see XO Buys Allegiance ).
— Ray Le Maistre, International Editor, Boardwatch