Clinton Says NTT-Verio Merger No Threat

WASHINGTON (08/23/2000) - U.S. President Bill Clinton has decided not to block NTT Communications Corp.'s planned acquisition of U.S. Internet backbone and Web hosting company Verio Inc.

Clinton sent a report to congressional leaders Wednesday saying the deal would not threaten U.S. national security. The report comes one week after the U.S.

Committee on Foreign Investment (CFIUS) recommended that he approve the acquisition. [See "UPDATE - U.S. Clears NTT Acquisition of Verio," Aug. 15.] There are no other outstanding issues between the companies and the U.S. government, a spokeswoman for Verio said Wednesday. NTT Communications announced Tuesday an extension of its tender offer until Aug. 30.

CFIUS conducted a thorough investigation of various national security issues related to the transaction, according to a statement issued by Clinton's press secretary. As a result of the investigation and negotiations with NTT Communications and Verio, any national security issues that may have been presented by this transaction have been resolved, the statement said.

The acquisition was valued at US$5.5 billion when it was first announced in May. It has been delayed several times by the U.S. government's probe into possible national security implications, the kind of scrutiny usually reserved for acquisitions of defense contractors. Verio, which operates a major part of the U.S. Internet backbone, will become a wholly-owned subsidiary of NTT Communications, which is a wholly-owned unit of Japan's dominant telecom carrier Nippon Telegraph and Telephone Corp. (NTT).

CFIUS is an interagency committee chaired by the U.S. Secretary of Treasury that seeks to serve U.S. investment policy through reviews of acquisitions that protect national security, while attempting to maintain U.S. policy on open and fair foreign investment.

The CFIUS investigation was the first of its kind involving the foreign acquisition of a U.S. ISP (Internet service provider) conducted under the Exon-Florio provision of the Defense Production Act of 1950. The provision, which became law in 1988, authorizes the U.S. president to investigate and suspend or prohibit, if necessary, a proposed foreign acquisition of a U.S. company engaged in U.S. interstate commerce.

In order for the U.S. president to suspend or prohibit a transaction he must find credible evidence that the controlling foreign interest might take action that threatens to impair national security, and that existing laws do not provide adequate authority for the president to protect national security matters related to the transaction.

NTT Communications, in Tokyo, can be reached via the Web at http://www.ntt.com/. Verio, in Englewood, Colorado, is at +1-303-645-1900 or at http://www.verio.com/.

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