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PSINet Acquisition Forms E-Commerce, ISP Powerhouse

PSINet Inc. Monday continued to advance its goal of becoming a major e-commerce service provider with the purchase of Transaction Network Services Inc.

PSINet will pay $720 million in cash and stock for Transaction Network Services. The total includes $351 million in cash and up to 7.8 million PSINet common shares

Headquartered in Reston, Va., TNS is a leading global ecommerce service provider. The data-clearing house reportedly processes more than 20 million transactions per day from 2 million different Web-based businesses. TNS handles more than 70 percent of the electronic sales transactions in the U.S.

William L. Schrader, PSINet chairman and chief executive officer, said acquiring TNS enables PSINet to fulfill the company's global expansion plan.

"This transaction represents the first combination of a market-leading ecommerce enterprise with a global facilities-based Internet service provider," Schrader said.

"Combining PSINet and TNS creates the leading global provider of ecommerce and Internet solutions to businesses worldwide, and enables PSINet to better access the $1 trillion marketplace for ecommerce services."

TNS currently has operations in Ireland, the UK, Sweden, France, Australia, and Japan and is expanding its business worldwide. The purchase by PSINet will allow TNS to expand its international reach of services while operating over PSINet's global backbone.

Schrader said the vertical integration of TNS's ecommerce transactions with PSINet's global connectivity services is a coup for entrepreneurs seeking to outsource services.

"PSINet's global reach significantly enhances TNS's market presence by immediately adding 16 global markets for their services. As financial institutions continue to outsource their critical web hosting capabilities to both TNS and PSINet, we can exploit this vertical marketplace by providing end-to-end solutions over our worldwide network," Schrader said.

John McDonnell Jr., TNS president and chief executive officer, said the deal allows his company to expand its services with efficient data transport, an essential element to further penetrating the ecommerce marketplace.

"TNS is known for its ability to deliver leading edge technology to its customers as they expand their businesses. It is clear that virtually all of our customers are playing an increasing role in the electronic commerce space," McDonnell said.

"TNS is committed to providing an innovative transport infrastructure to support them as they move their businesses forward. We see this acquisition by PSINet as a strategic way for TNS to meet that objective."