VeriSign buying Illuminet in $1.2B deal

Digital trust services vendor VeriSign is acquiring telecommunications services firm Illuminet Holdings in a move to expand its offerings beyond the Internet.

In an announcement today, Mountain View, California-based VeriSign said the acquisition will help it offer digital identification, transaction security and other services to Illuminet's telecommunications customers.

The all-stock deal is valued at approximately $1.2 billion. Under the agreement, VeriSign will exchange .93 shares or options of VeriSign common stock for each outstanding share and option of Olympia, Washington-based Illuminet. The deal is expected to be completed late in the fourth quarter of this year or early in the first quarter of next year, pending approvals by the boards of directors of each company, Illuminet stockholders and government regulators.

Illuminet said it provides unseen services that allow telecommunications carriers to connect to one another to route and direct calls over networks.

"Through this combination, service providers and enterprises will have the opportunity to use VeriSign's highly scalable data and voice infrastructure to deliver new services and to improve the speed and efficiency of their current offerings," said Stratton Sclavos, president and CEO of VeriSign, in a statement. "Just as we created a trusted digital environment with our Internet-based services, this new integrated data/voice infrastructure will serve as the foundation for new types of services for the highly anticipated next-generation networks."

Roger H. Moore, CEO of Illuminet Holdings, said the combination of the two companies will open new opportunities for data and voice services, along with providing new revenue streams for the company.

VeriSign said it will use its global infrastructure to push new services for Illuminet's customers, including secure short messaging, voice over Internet Protocol bridging and the ability to switch carriers and keep their old phone number -- so-called local number portability.

Through the acquisition, VeriSign will also be able to deliver data/voice offerings such as WebNum, a navigation service that enables wireless phones to link specific numbers directly to Internet domain names for easier access. Also to be offered is a Global Voice Registry service, which enables callers to reach a business simply by saying a company's name into a phone.

Pete Lindstrom, an analyst at Hurwitz Group Inc. in Framingham, Massachusetts, called the move an infrastructure play that makes sense for VeriSign as it seeks to diversify its offerings.

"Security is part of the infrastructure, and they'll continue to build services" around it, whether they are Internet-based or otherwise, he said.

Illuminet had $47.2 million in revenue in the second quarter of this year and has about 500 workers. Although based in Olympia, it also has operations in Overland Park, Kansas, and Dallas. Those facilities will remain open under the deal.

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