Concentric Network Acquires UK's Largest Independent ISP

San Jose, California-based Concentric Network Corp. (Nasdaq: CNCX), a provider of e-business services for small and medium-sized companies, took its first step into Europe Wednesday with the purchase of London-based Internet Technology Group plc (ITG). ITG is one of Britain's largest ISPs.

The transaction is valued at approximately $215 million (US$), consisting of 50 percent cash and 50 percent Concentric Network stock. The deal , which is subject to regulatory approval and the backing of Concentric Network shareholders, is expected to secure both and be finalized by the fourth quarter.

Concentric will be catapulted across the Atlantic into the burgeoning European Internet marketplace.

"This pivotal acquisition solidifies Concentric's ability to expand into the emerging global marketplace for Internet services, said Concentric Network CEO Henry Nothhaft. "ITG's network extends from the UK into Europe, providing Concentric with a stepping stone into the European market. We not only have the opportunity to extend our market reach for delivering e-business services, but can also simultaneously offer our customers more cost-effective access to the European market."

ITG CEO Laurence Blackhall will remain in his position and report to Nothhaft.

Spanning the Continent

ITG is the UK's largest independent ISP. The firm booked revenues of $17.6 million last year and $14.2 million for the first six months of this year. The company, which is traded on the Alternative Investment Market (AIM) in London, has been working diligently on expanding its network.

In April, ITG signed a $6 million expansion contract with Cisco Systems, increasing its user access potential to 600,00 -- with the eventual goal of one million. In July, the company announced that it was engaging in building the largest pan-European network by an independent ISP, signing up major European telecom companies to connect its UK, Dutch, German and French operations.

The company has 35 POPs throughout the UK. Last year, it bought Amsterdam-based Internet Facilities Europe B.V. for approximately $8 million. ITG was also named the "ISP of the Year" by Internet Magazine last year.