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NEW YORK - Verizon Communications Inc. (NYSE:VZ) today terminated its merger agreement with NorthPoint Communications (Nasdaq:NPNT), citing the deterioration in NorthPoint's business, operations and financial condition since Aug. 7 when the two companies agreed to merge their digital subscriber line (DSL) businesses. As a result of this deterioration and the termination of the agreement, Verizon also said that it has no obligation to arrange for NorthPoint to receive additional financing.
The merger agreement, which was slated for completion next year, called for the companies to combine their DSL businesses, including selected assets and personnel, to form a national broadband company.
Under the terms of the agreement, Verizon's obligation to complete the merger was conditioned upon NorthPoint's business, operations and financial condition each remaining materially the same as they were at the time the agreement was signed. NorthPoint recently reported a continuing decline in revenues, an erosion of its customer base, an increase in expenses due to write-offs for increased bad debt, and, as a result, a material increase in net losses.
Verizon said that given the material adverse changes, it has terminated the agreement as permitted under the terms of the contract.
Verizon will address the financial impact of the termination of the merger agreement and the steps it is taking to expand outside its current wireline footprint tomorrow, Nov. 30. The company will issue a news release at 8 a.m. Eastern Standard Time and will post it to its Website at www.verizon.com. The company also will hold a conference call at 9 a.m. To listen to the call or view related materials, go to www.verizon.com/investor.
Verizon Communications Inc. (NYSE:VZ), formed by the merger of Bell Atlantic and GTE, is one of the world's leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States, with more than 101 million access line equivalents and more than 26 million wireless customers. A Fortune 10 company with more than 260,000 employees and approximately $60 billion in 1999 revenues, Verizon's global presence extends to 40 countries in the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com .