Covad sells to private equity firm for $304 million
Platinum Equity LLC will acquire Covad
Communications Corp. for about $304 million, making the communications
services company the latest technology company to sell to a private equity firm.
Platinum will pay US$1.02 in cash per share for Covad, a 59 percent premium
over Covad's closing price Friday on the American Stock Exchange, the companies
announced Sunday. The acquisition is expected to close by the end of the second
quarter of 2008.
San Jose, Calif.-based Covad provides voice and data services such as VoIP
(Voice over Internet Protocol) and DSL (Digital Subscriber Line) to businesses,
specifically small and medium-sized enterprises (SMEs).
In June, Covad cut
8 percent of its staff as part of a restructuring that also saw the company
take a $1.5 million charge for Q2 2007.
It is due to report third quarter results Tuesday. The company reported a loss
of $11.6 million for the second quarter of this year.
Private equity firms have been particularly active in acquiring technology
companies this year. TPG Capital and Goldman Sachs bought Alltel
Corp. in May for $27.5 billion, with TPG and Silver Lake Partners snapping
up Avaya Inc. for $8.2 billion just a few weeks later.
IDG News Service
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