THE U.S. GOVERNMENT is set to give the nod Monday to the proposed takeover of Internet Web hosting and backbone operator Verio, of Englewood, Colo., by Japan's NTT Communications, after the latter gave assurances it would cooperate with American law enforcement agencies on wiretapping, the Nihon Keizai Shimbun newspaper reported.
Citing people familiar with the deal, the newspaper said in its Saturday evening edition that the Committee on Foreign Investment in the United States (CFIUS) is expected to recommend to President Clinton on Monday that there is no need to block the deal. The FBI raised concerns over NTT's proposed acquisition of Verio because it feared its ability to conduct wiretaps on Verio customers would be impeded if the company was taken over by a company in which the Japanese government maintained a majority stake.
CFIUS, an interagency committee, was established to review investment by foreign companies in the U.S. to ensure such investments raised no national security concerns. The committee, which gets its power from the Exon-Florio Amendment to the Defense Production Act of 1950, usually deals with defense sector investments. The act allows for an investigation of up to 45 days and an additional 15 days for final action by the president.
The investigation has caused NTT to delay its acquisition four times as the investigation continues. NTT's tender offer is scheduled to expire at midnight Eastern Standard Time Monday; CFIUS also faces Monday as a deadline to submit its report.
The Japanese newspaper report comes a day after The Wall Street Journal said the two sides had reached a basic agreement and were putting the finishing touches on the deal.
A spokesperson for NTT Communications declined to comment on the press reports or the current status of the deal, citing a confidentiality agreement with CFIUS.