Regulators Reviewing PSINet, TNS Deal

Allegations of insider trading have brought PSINet. Inc.’s $720 million acquisition of Transaction Network Services Inc. under review.

According to The Washington Post, the New York Stock Exchange and the U.S. Securities and Exchange Commission are investigating a possible leak of insider information about the deal after unusual trading activity boosted TNS shares $6 to a record $34.25 last Friday.

The Post reported that a surprise flood of orders for shares of TNS stock hit the floor of the NYSE late last Friday afternoon, three days before the acquisition was made public.

The SEC and the NYSE have declined comment as to the status of their reported insider trading review.

Both PSINet (PSIX) and TNS executives reaffirmed that the buy-out talks were discreet, but that has not stopped the SEC and NYSE from scrutinizing the deal.

As reported by The Post, the spurt in trading came so late in the day on Friday that by the time the exchange reached someone who was in on the secret, the market was getting ready to close. Fearing further leaks, executives of the both firms worked all weekend to complete the deal before trading in their stocks began Monday morning.

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.

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.

Headquartered in Herndon, Va., PSINet is a global Internet service provider. The also ISP provides a nationwide communications network that carries some of TNS’s business. The vertical integration of the two companies will mean more traffic for PSINet and lower operating costs for TNS. The deal would also provide PSINet an opportunity to provide other services to the millions of merchants and credit card companies that already doing e-commerce business with TNS.