VIA Net.Works Buys PSINet Europe

The consolidation of Europe's web hosting industry continued this week as VIA Net.Works announced that it is buying PSINet Europe for 18 million Euros (about $22.1 million). The deal follows on the heels of Via's acquisition of France's Amen/Agarik in January, one of numerous 2004 mergers in the European market .

Amsterdam-based VIA Net.Works hosts about 204k hostnames, and says it will add 4,000 new customers by buying PSINet Europe from majority owner Israel Corporation Limited. VIA will take over PSINet Europe operations in Belgium, France, Germany, the Netherlands and Switzerland, but PSINet Europe's U.K. operations are not part of the acquisition.

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.