Verizon Scratches Deal to Buy Controlling Stake in NorthPoint

Leading U.S. local telephone company Verizon Communications canceled an $800-million agreement to buy a 55% stake in NorthPoint Communications Group due to deterioration in the high-speed Internet access company’s finances. NorthPoint contended Verizon was not entitled to terminate the deal and said it would explore its “legal remedies.” NorthPoint also will examine its funding options after the Verizon pullout. Verizon had agreed in August to purchase a controlling stake in NorthPoint and merge the companies’ digital subscriber line businesses. NorthPoint’s stock has dropped in recent weeks amid concerns about the Verizon deal, the weak financial health of its customers and a general decline in the telecommunications sector. NorthPoint’s market capitalization stands at about $266 million, well below its $1.9-billion market cap in August when the deal was first announced. Shares of New York-based Verizon gained 81 cents to close at $55.81 on the New York Stock Exchange. San Francisco-based NorthPoint fell 9 cents to $2 on Nasdaq.