NorthPoint Sues Verizon Over Termination of Merger Agreement

NorthPoint Communications Group Inc. sued Verizon Communications Inc., alleging that the telecommunications giant unlawfully backed out of an $800-million merger agreement. NorthPoint wants Verizon to pay $1 billion or go through with the merger, according to the suit filed in San Francisco Superior Court. Under the merger accord, New York-based Verizon was to pay San Francisco-based NorthPoint $800 million for a 55% stake in the company while creating a nationwide digital subscriber line service. Verizon said it decided to terminate the merger agreement because of a deterioration in NorthPoint’s finances. The legal battle will center on a clause in the lengthy agreement allowing Verizon to walk away from the accord if there is a “material adverse change” in NorthPoint’s business climate. NorthPoint stock closed unchanged at 41 cents on the Nasdaq. It was trading at $15 when the deal was announced. Verizon’s shares slid $1.69 to close at $56.19 on the New York Stock Exchange.