US LEC has won approval for its proposed acquisition of FastNet, a provider of Internet access and managed hosting services in Pennsylvania.
The deal is part of the Charlotte-based regional telecommunications service providers’ aggressive move into data services. Sales of data and Internet services has become a major factor in US LEC’s expanded revenue growth. US LEC recently reported that data sales increased 85 percent in 2003 over a year earlier.
“This transaction solidifies and enhances our current and future plans for data product and service growth,” said Jeff Blackley, senior vice president of US LEC, in a statement.
US LEC acquired most assets of FastNet through bankruptcy proceedings. A US district judge approved US LEC’s offer this week, and the deal is expected to close before the end of the month, according to the company.
In the deal, US LEC paid $6 million in cash, $1 million stock and also assumed some liabilities plus a $1.5 million note.
In return, US LEC acquired its first two data centers, more than 2,100 business customers and 26,000 web hosting and dial-up Internet users.
US LEC estimates the acquisition will mean $24 million in additional revenue. The company said it plans to keep the FastNet offices, data centers and most of its 117 people.
“We gain two data centers and add new and improved data and Internet services to our product suite,” said Aaron Cowell, president and chief executive officer of USLEC, in a statement.
The acquisition was funded by $10 million US LEC recently raised through a stock offering. US LEC also disclosed earlier this week that it had reduced its debt by $6 million.
US LEC (Nasdaq: CLEC) closed at $5.79 on Thursday, down 27 cents. The stock was up 18 cents in trading Friday morning.
Analyst firm Kauffman Brothers rates US LEC as a “Buy.”
US LEC: www.uslec.com