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Globix, Neon To Merge

Hosting and managed applications vendor Globix Monday announced plans to merge with Neon Communications, a privately held provider of optical networking services for customers in the Northeast and mid-Atlantic markets.

The transaction, still subject to approval by Neon stockholders, was expected to exchange 27.6 million shares of Globix common stock, and make Neon a wholly owned subsidiary of Globix.

Company officials did not reveal how the merger would impact channel programs at either company.

While complete terms of the stock transaction were not disclosed, figures show that the resulting company would have more than $110 million in combined revenue. Neon's revenue for the year ended Dec. 31, 2003, was $41.6 million; Globix revenue for the year ended Sept. 30, 2003, was $60.2 million.

According to Pete Stevenson, president and CEO of New York-based Globix, the deal will enable Globix to grow and continue to meet escalating customer needs.

"The merger provides a significant level of vertical integration for the combined entity," he said in a conference call. "We expect that cost savings achieved by combining operations will help fuel the growth of new transport, IP and value-added services."

Following the merger, Globix will continue all existing operations and incorporate Neon's brand name and operations gradually. The combined company will have offices in markets across the United States, and will utilize remote data center and co-location sites integrated along Neon's fiber network on the East Coast. Both Stevenson and Neon CEO Steve Courter said they expect to maintain their firms' respective network operation centers to ensure network and systems performance in conjunction with all service-level agreements.

The merger agreement also calls for the Globix board of directors to include four members from the board of directors at Neon, four members of the current Globix board and one member who currently serves on both boards.

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