ATLANTA, GA. — Internap Network Services, a provider of advanced Internet services, is acquiring VitalStream Holdings, which offers content delivery services, in a deal valued at more than $217 million.

Internap (Nasdaq: INAP) will issue approximately 11.9 million shares of stock to acquire VitalStream (Nasdaq: VSTH). Internap shares fell 8 percent, or $1.37, to $15.68, in Thursday morning trading.

VitalStream shares surged, however, $1.39, or 22 percent, to $7.79.

The value of the deal is based on the closing price of both company’s stock on Wednesday.

VitalStream is based in Irvine, Ca. The company went public in June.

The merger is expected to close in the first quarter of next year.
VitalStream technology enables businesses to broadcast digital media content over the Internet.

“The marketplace for content delivery services is rapidly expanding as the needs for companies to integrate streaming audio and video into their web presence become more critical and more complex,” said James DeBlasio, Internap’s chief executive officer, in a statement. “The combination of VitalStream’s content delivery services and our high performance intelligent route control solutions positions us to create the market leading platform for distribution of rich media content and advertising.”

The combined company will have more than 450 employees and more than 3,000 customers.

“Internap’s acquisition of VitalStream is a business combination that creates a scalable public company with complementary product lines and accelerated growth potential,” said Jack Waterman, chairman and CEO of VitalStream. “The new Internap will offer turnkey digital media broadcasting solutions for web users of all sizes. By uniting our two organizations, customers will have a complete solution to realize the full on-line potential of their digital assets.”

Internap has data centers in 19 U.S. centers other than Atlanta plus in Europe, Japan, Hong Kong, Singapore and Australia.