June 24, 2004 — (WEB HOST INDUSTRY REVIEW) — Web hosting and Internet service carrier XO Communications (xo.com) announced on Wednesday that it has completed its acquisition of the assets belonging to Allegiance Telecom (algx.com) for $322 million in cash, including $11 million of adjustments for working capital and approximately 45.4 million shares of XO common stock.
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According to XO, the acquisition significantly expands the carrier’s local market coverage across the US, including major markets such as Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Philadelphia, San Francisco and Washington, DC. XO said the addition of Allegiance?s services, including its specialized services for small and medium-sized businesses, allows it to offer a broader range of services to businesses of all sizes.
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“The new XO will have the scale and size to serve even more business customers for their local and national telecommunications needs and provide a more cost-effective alternative to the incumbents,” says Carl Grivner, CEO of XO Communications. “The combination of our assets and services not only strengthens XO?s ability to serve more business customers but significantly enhances our position as a provider of wholesale local access services to other telecommunications companies.”
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XO expects the acquisition to help reduce its overall expenditures.
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“The improvements are expected to reduce our costs and expedite XO’s path to profitability,” says Wayne Rehberger, chief operating officer of XO Communications. “We have already initiated a number of network, operational and systems integration initiatives.”
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Saddled with one billion dollars of debt, Allegiance Telecom filed for chapter 11 bankruptcy protection in May of 2003. In December, it sold certain assets to Qwest Communications and is in the process of moving its shared Web hosting business.
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XO recently re-launched the Concentric hosting brand.
