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PSINET CONFIRMS $25M CANADIAN ACQUISITION

PSINet Inc, the still loss-making Herndon, Virginia internet service provider recently on the acquisition trail to expand into Europe (CI No 3,280), is now expanding its Canadian presence with the acquisition of Toronto-based iSTAR Internet Inc. The company, which earlier this year declared its intention to become ‘more international’ in its offerings, paid $25m in convertible preferred stock for iSTAR through its wholly-owned Canadian subsidiary PSINet Ltd. The combined business will have a revenue of more than $34m, making it the largest ISP in the Canadian market. The company said growth plans previously in place called on it to make significant investment in Canada in 1998, but this acquisition will enable it to grow its revenues in Canada much faster than planned. The two companies’ networks will be integrated, which they say will enable them to reduce their cost per customer. Under the terms of the agreement, iSTAR shareholders will receive non-voting, 8% cumulative convertible shares of PSINet Inc. PSINet saw third quarter losses down to $10.7m from $12.5m in the same quarter last year on revenue which rose significantly, up 32.2% to $32m (CI No 3,273).

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CBR Staff Writer

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