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PSINet in $1.9B purchase
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March 22, 2000: 3:51 p.m. ET
Acquisition of Metamor Worldwide expands PSI e-commerce strategy
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NEW YORK (CNNfn) - Internet service provider PSINet Inc. agreed to buy Metamor Worldwide Inc., a technology consulting firm, for $1.9 billion in stock, the companies said Wednesday.
PSINet said Metamor shareholders will get 0.9 share of PSINet stock for each of their shares, equal to about $44.55 a share at Tuesday's closing prices, or about $1.9 billion. The price is a 178 percent premium over Metamor's (MMWW: Research, Estimates) close of 16 Tuesday.
 The news sent shares of Metamor soaring 17-11/16, or 110.6 percent, to 33-11/16, and shares of its Xpedior subsidiary climbing 7-7/8, or 55 percent, to 22-3/16. PSINet shares fell 7-7/16, or 15 percent, to 42-1/16.
Wednesday's deal gives Herndon, Va.-based PSINet a controlling stake in Metamor's e-commerce unit Xpedior Inc. (XPDR: Research, Estimates) of Chicago, and is expected to add to PSI's earnings immediately, the company said.
PSINet (PSIX: Research, Estimates), which carries high-speed Internet traffic for business, government agencies and other Internet service providers, said the purchase will allow it to expand further into e-commerce and provide a broader range of services to its clients.
"The acquisition of Metamor Worldwide furthers our plans to move into the applications outsourcing arena and enables us to offer our customers everything they need to do business on the Web," PSINet Chairman William Schrader said.
Houston-based Metamor, which provides tech consulting services to large corporations, had a net loss of $3.9 million, or 12 cents a share, for its latest quarter. Its sales totaled $577 million for 1999.
PSINet has made a slew of acquisitions over the past two years to further its presence in Europe and Latin America. Last week the company bought three Internet service providers (ISPs) in Argentina and Brazil. The purchase of GlobalNet was the company's eighth in Brazil in less than a year, making it the third-biggest ISP in that country.
Last week, PSINet teamed with Latin American Internet firm StarMedia Network (STRM: Research, Estimates) to form a co-branded portal, offering Net content and services to PSINet's 250,000 Latin American subscribers.
Metamor announced plans to buy technology consulting firm SPR Inc. (SPRI: Research, Estimates) 14 months ago, but that deal was scrapped last March, with SPR citing industry trends associated with Year 2000 computer problems. More recently, Metamor agreed to buy Maryland-based NextLinx Services, a provider Oracle-based software packages and services, in a deal whose terms were not disclosed.
"PSINet made a bold move to fill up its existing IP (Internet protocol) pipes and existing and planned hosting centers," said Robertson Stephens analyst Richard Juarez in a research note.
"We believe Xpedior will give the combined PSI and Metamor enterprise access to strong legacy of Internet integration capabilities...the combination of these skills and delivery capacity will provide the company with the ability to accelerate the filling of both the pipes and the hosting centers," Juarez said.
There is no limit, or collar, on the value of PSI shares in the Metamor deal, which is expected to close by mid-year and is meant to be tax-free to shareholders, the companies said. 
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Metamor
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