Metromedia to Buy AboveNet

Metromedia Fiber Network Inc., a developer of fiber-optic communication networks in the U.S. and overseas, said it will pay $1.37 billion in stock to buy AboveNet Communications Inc., to push into the market for hosting computers that run large corporate Web sites. AboveNet holders would receive 1.175 Metromedia shares for each AboveNet share, valuing AboveNet at $44.06 a share. AboveNet operates so-called server farms for Internet customers such as RealNetworks Inc. and WebMD Inc., maintaining their Web site computers at data centers in San Jose and Vienna, Va. The acquisition would allow Metromedia, backed by billionaire John Kluge, to link its high-speed network to AboveNet customers. For AboveNet, the transaction reduces the cost of providing high-speed Internet connections. The offer values AboveNet at a 20% premium over its closing price Tuesday. AboveNet shares, which have more than tripled this year, rose $4.06 to close at $40.81, while Metromedia Fiber fell $5 to $37.50, both on Nasdaq.