NextLink, Concentric Plan $2.9 Billion Merger

NextLink Communications Inc., which provides local and long-distance telephone services, has agreed to merge with Internet access and Web hosting provider Concentric Network Corp. in a stock transaction valued at about US$2.9 billion, the companies announced today.

The combined company will offer a range of voice, data and Internet services to small and medium-sized businesses, including telephone services, DSL (digital subscriber line) Internet access, Web and applications hosting, and virtual private network services.

The firms hope to close the deal by the end of the second quarter. The transaction has been approved by both board of directors, and is subject to approval by Concentric's shareholders and industry regulators, the companies said.

NextLink Chairman and Chief Executive Officer Dan Akerson will remain chairman and CEO of the combined company. Concentric CEO Henry Nothhaft will become a vice chairman of the NextLink board and lead the combined company's retail Internet and data services businesses, which will continue to be offered under the Concentric brand name.

NextLink operates fiber optics and fixed wireless networks across the U.S.

Concentric's pending acquisition of London-based Internet Technology Group PLC, expected to close in the first calendar quarter, will give the combined company an established base in Europe, the companies said.

Each share of Concentric common stock will be exchanged for $45.00 of NextLink common stock; based on NextLink's closing price of $78.50 on Jan. 7, the ratio would be 0.573 NextLink shares per Concentric share, and Concentric Network shareholders would hold approximately 17.8 percent of the fully diluted shares of the combined company.

The transaction is intended to be tax-free to NextLink and Concentric Network shareholders and will be accounted for as a purchase.

The combined company headquarters will be in McLean, Virginia, and the Concentric Network operations will remain in San Jose, California. The total employee base will be approximately 4,000.

NextLink currently provides services in 49 markets across the U.S. The company is in the process of acquiring exclusive rights to use a 16,000-mile high-speed, IP-centric fiber optic backbone network that will connect more than 50 cities in the U.S. and Canada.

In afternoon trading on the Nasdaq stock market, Concentric's shares had leapt more than $9 over Friday's closing price, to $39.11. NextLink's shares dropped $3.63 from Friday's close, to $74.88.

NextLink, in Bellevue, Washington, can be contacted at +1-425-519-8900, and on the Web at http://www.nextlink.com/. Concentric, in San Jose, California, can be contacted at +1-408-817-2800, and on the Web at http://www.concentric.com/.

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