Covad Sold to Private Equity Firm

Platinum Equity LLC will acquire Covad Communications Corp. for about US$304 million, making the communications services company the latest technology company to sell to a private equity firm.

Platinum will pay US$1.02 in cash per share for Covad, a 59 percent premium over Covad's closing price Friday on the American Stock Exchange, the companies announced Sunday. The acquisition is expected to close by the end of the second quarter of 2008.

San Jose, Calif.-based Covad provides voice and data services such as VoIP (Voice over Internet Protocol) and DSL (Digital Subscriber Line) to businesses, specifically small and medium-sized enterprises (SMEs).

In June, Covad cut 8 percent of its staff as part of a restructuring that also saw the company take a $1.5 million charge for Q2 2007.

It is due to report third quarter results Tuesday. The company reported a loss of $11.6 million for the second quarter of this year.

Private equity firms have been particularly active in acquiring technology companies this year. TPG Capital and Goldman Sachsbought Alltel Corp. in May for $27.5 billion, with TPG and Silver Lake Partnerssnapping up Avaya Inc. for US$8.2 billion just a few weeks later.