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FTC, DOJ Clear Level 3's Purchase of Genuity

The Federal Trade Commission and the U.S. Department of Justice Tuesday cleared the way for Level 3 to acquire all of the assets of Genuity for $242 million.

The FTC and DOJ said they did not need to request additional information about the transaction.

"Today's announcement is a significant milestone as we continue to make progress toward the completion of Level 3's acquisition," said Ira Parker, Genuity's executive vice president and general counsel. "Upon the closing of this transaction, we will be a part of a stronger, more financially stable company, which will continue to provide a high level of service to our enterprise and service provider customers."

The firms announced the deal, rumored for months, on November 27. Genuity, a Woburn, Mass. based networking services provider, filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code to speed the acquisition process.

Genuity and Broomfield, Colo.-based telecommunications services provider Level 3 anticipate the acquisition will be completed in the first quarter of 2003, pending approval of the bankruptcy court and certain government regulatory agencies.

The sale comes after a 2-year roller coaster ride for Geunity. Formerly the Internet division of GTE Corp., Genuity spun out as part of GTE's merger with Bell Atlantic, now Verizon Communications, in 2000.

Following the merger, Genuity spent millions of dollars on advertising and corporate sponsorship of golf tournaments and other events to raise the profile of the company and its Black Rocket service.

But as large customers delayed or canceled orders for IT equipment and services, Genuity suffered. Then, this summer, Verizon decided not to reintegrate the company, leaving management searching for a survival strategy.