NEW YORK (CNNfn) - Metromedia Fiber Network Inc., a fiber-optic hardware company, said Wednesday it will acquire Internet connections company AboveNet Communications Inc. in an all-stock deal worth approximately $1.55 billion.
White Plains, N.Y.-based Metromedia (MFNX) said it will distribute 1.175 shares of its Class A common stock for each share of AboveNet (ABOV) stock outstanding. Based on Metromedia's share price of $42.50 at the close of trading Tuesday, that is a premium of more than 35 percent over AboveNet's closing price of $36.75.
There are about 31.1 million common shares of AboveNet stock outstanding.
The companies said that through the deal, the combined company will bring expanded Internet services to consumers and business customers. Metromedia Fiber provides access to its high-density fiber network to businesses, phone companies and governments in so-called "Tier One" strategic markets, allowing customers to implement data, video Internet and multimedia applications. AboveNet provides high-speed Internet connection services.
Through the combination of the two companies, "Internet traffic is able to flow more predictably, far more reliably and at far lower costs," said Metromedia Fiber President Howard Finkelstein.
San Jose, Calif.-based AboveNet will have access to Metromedia's planned network of more than 1.1 million fiber miles in North America and Europe, the companies said.
The companies said they expect the merger to be completed in the third quarter. The deal already has been approved by the boards of both firms.
The deal still is subject to approval by shareholders and the regulatory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.