Verio finally finds suitor
Acquirer: NTTType of deal: cash acquisition of Verio Amount: $5 billionLaunched: 7 May 2000Advisers: Deutsche Banc Alex Brown
Japanese telecoms giant NTT already owned a 10% stake in Verio, the US internet service provider, having financed some of the company's start-up costs years earlier. Now Verio was up for sale, and had been courting suitors for some time. NTT, whose US strategy was almost non-existent, decided that it could not allow the company to fall into anyone else's hand.
Foreign takeovers of US companies are nothing new. But NTT's purchase of Verio was a first in other respects. For one, it was a cash deal. "NTT had the resources to do the deal on an all-cash basis. In turbulent markets like we had last spring, investors are attracted to the certainty of an all cash offer," says Monte Koch, head of North American M&A for Deutsche Bank. And it was a cash offer made at a time when the US market for all things technology, telecom and internet-related was extremely volatile following the Nasdaq crash in April.
The other first was that it was the first time a foreign firm was going to be the owner of a telecommunications company, and that raised not just regulatory issues but also got the FBI interested, as it wanted to make sure that they still had sovereignty over tapping systems in the US even if they were owned by foreign firms.