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Frontier in VIP Web lounge
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January 15, 1998: 1:37 p.m. ET
Telecom firm to pay about $180M for GlobalCenter's digital net links
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NEW YORK (CNNfn) - In a move it says will allow it to usher customers into the equivalent of a VIP lounge in the congested lobby of cyberspace, Frontier Corp. has agreed to acquire GlobalCenter Inc. for about $180 million in stock -- and with it the dedicated links that can make the Internet a more surfer-friendly place.
Sunnyvale, Calif.-based GlobalCenter bills itself as the industry leader in digital data distribution.
Using a global network of six distribution centers, the company handles 1.5 billion page views a month, 150 million Internet requests and as many as 250,000 software downloads a day.
GlobalCenter's client network of more than 8,000 business customers features some of the most highly-trafficked sites on the World Wide Web, including Netscape, Yahoo!, USA Today and Electronic Arts.
Frontier is the nation's fifth-largest long- distance telephone company. It provides integrated telecommunications services to an estimated 50,000 dial-up customers over long-distance, local and wireless networks.
But until now, Frontier officials say, the efficiency of their services has often been hampered by the congestion that pervades much of the Internet,
Under terms of the planned acquisition, Frontier will purchase GlobalCenter for 6.4 million shares of common stock, priced at their value at the deal's expected closing sometime in the first half of 1999.
Frontier said an additional 900,000 shares will be available to cover GlobalCenter options and warrants. Sixty-five percent of these are scheduled to vest over the next four years.
The transaction is expected to be accretive to earnings beginning in the first half of 199, Frontier officials said.
Joseph Clayton, Frontier Corp.'s president and chief executive officer, said that in acquiring GlobalCenter's vast digital offerings his company had "taken a giant step forward in executing our bold new strategy."
"By adding GlobalCenter's next-generation Internet/data services to our integrated product portfolio," Clayton said, "we'll leverage the capabilities of our SONET fiber optic network, which was engineered and built with the latest network technologies to yield the highest performance and capacity in the industry."
The greater speed and reliability afforded by GlobalCenter's distribution network will allow Frontier to "bypass the congestion of the public Internet cloud," according to Randal Simonetti, Frontier Corp.'s vice president of communications.
Douglas Hickey, GlobalCenter's chief executive officer, said his company's "digital distribution architecture" is quickly turning the Internet into a viable business medium.
"As the data world continues to evolve, the winners will be those companies that have the backbone network, the broadband gateways and the processing capabilities to keep pace with the demands for bandwidth," Hickey said.
Frontier Corp.'s stock (FRO) dipped in midday trading on the New York Stock Exchange by 5/8 to 25-7/16 on news of the deal. That was just 1/16 below the stock's 52-week high of 25-1/2.
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