Top ISP EarthLink Inc. said today it will buy privately held broadband provider New Edge Networks for approximately $144 million in a move geared toward improving Earthlink’s position with small and medium businesses.
While EarthLink will acquire 100 percent of the company, New Edge customers, sales partners and employees might not see many changes. New Edge said it intends to honor the terms and conditions in all agreements with referral and sales agents, resellers and wholesalers. Commissions also will remain status quo. If anything, New Edge will have new access to corporate and financial resources for “better network reliability, more exciting products and better responsiveness,” said a company spokesperson.
EarthLink said today that bringing New Edge into its fold will allow it to better reach the SMB market, but New Edge agents and resellers won’t have access to the EarthLink portfolio initially. The companies do intend to create joint, integrated offerings in the future, including voice, data, protection and security tools.
New Edge will be a wholly owned subsidiary within EarthLink’s Value and SME group. It will continue operating under its name (the official branding will be “New Edge Networks – An EarthLink Company), retain its own OSS systems and continue to be headquartered in Vancouver, Wash. Also, there are no plans to close any New Edge locations, reduce headcount or eliminate members of the executive team. Dan Moffat will remain as president of New Edge.
“When we bring together EarthLink’s financial resources and reputation for outstanding customer service with our national network and proven track record of performance, we will be uniquely positioned for serving our customers and tapping the growing market for business networks,” said Moffat. “We believe this transaction benefits customers, investors and employees of both companies.”
“New Edge Networks is a tremendous growth platform for EarthLink to compete in the rapidly expanding SME networking market,” said Bill Heys, president of EarthLink’s value and small to medium enterprises business unit.
“This acquisition builds upon our existing suite of award-winning services for small businesses and gives New Edge Networks the added resources to strengthen its market position.”
The transaction, scheduled to close in the first quarter of 2006, includes 2.6 million shares of EarthLink common stock and $114.3 million in cash, including cash to be used to satisfy certain liabilities. Atlanta-based EarthLink has more than 5 million customers and had 2004 revenues of approximately $1.3 billion.