ClaraNet Agrees to Buy VIA.Net Works

Claranet has signed a letter of intent to acquire cash-strapped hosting provider VIA.Net Works for $26.5 million, the two companies said today. Under terms of the deal, Claranet would acquire all of VIA's European and U.S. businesses, including PSINet Europe operations and the Amen Group, which were purchased last year during VIA's acquisition spree. Claranet had purchased VIA's UK operations in a separate deal last September.

The Amen and PSI Net Europe assets were placed for sale last month when VIA said it faced "an urgent liquidity crisis." The deal will quadruple the size of Claranet's hosting operation, combining its existing 54.2K hostnames with VIA's 175K hostnames. That would make the combined entity the sixth-largest hosting provider in Europe, behind Germany's 1&1 Internet and Freenet/Tect, British providers Fasthosts and PIPEX Communications, and Italy's Aruba.

The distressed sale continues the consolidation in the European hosting market following a flurry of 2004 deals in which Freenet bought Tect's hosting operation, Host Europe PLC was bought by Pipex, NetBenefit purchased Easily Ltd., and Lycos Europe bought United-Domains of Munich.

Claranet originated in the UK in 1996 and has expanded into France, Spain, and Germany. The company provides managed connectivity and web hosting services, e-commerce, leased lines, DSL, Virtual Private Networks and security products.

"Following our past acquisitions on the continent and last year's acquisition of VIA's UK operations, Claranet is consolidating its position as a leading European provider of communication services to business," said Claranet's Chief Executive Officer Charles Nasser said in announcing the purchase agreement.