The assets being acquired by VIA currently generate annual positive cash flow of about Euro 34 million (U.S. $42 million). The company said it expects that revenue, plus cost savings from combining the two companies’ operations, will pay for the transaction within about three years. The deal will mean layoffs for some employees, as VIA expects to save about $4 million by consolidating PSINet Europe with its existing business.

“This is the right deal, at the right time, for VIA,” said Rhett Williams, VIA’s Chief Executive Officer. “On a pro forma basis and before synergies, the combined company will have revenues in excess of $110 million, fewer than 600 employees, gross margins in excess of 55 percent and a revenue mix of approximately 30 percent hosting, 55 percent access and 15 percent other managed services, such as VPNs and security.”

In previous 2004 deals, Host Europe PLC was bought by Pipex, NetBenefit bought London-based rival Easily Ltd., and Lycos Europe bought United-Domains of Munich.