EarthLink Acquires Provider of Virtual Private Network Services

The deal for privately held New Edge Networks, which is based in Vancouver, was disclosed on Tuesday.

EarthLink (Nasdaq: ELNK) said the deal was part of its strategy to offer more services to small and medium sized businesses. New Edge Networks is expected to produce some $120 million in revenue this year.

"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."

EarthLink is paying some $114.3 million in cash plus some 2.6 million shares of EarthLink stock in the deal. It is expected to close in the first quarter of 2006. New Edge's 345 workers will be retained, and New Edge will operate as a wholly owned subsidiary out of Vancouver, the companies said.

"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 Dan Moffat, president and CEO of New Edge Networks. "We believe this transaction benefits customers, investors and employees of both companies." Moffat will remain president of New Edge Networks.