Level 3 puts $242m on the table for Genuity

Level 3 is to buy internet hosting and IP networking company Genuity for $242m in cash.

Genuity will go into voluntary Chapter 11 bankruptcy protection ahead of completion of the deal in the first quarter of 2003.

Genuity's operations have been main hubs over the years for the development of the internet and the company has gone through several owners and names - from BBN, to GTE Internetworking, and then Genuity, after it was spun off because of regulatory concerns relating to the formation of Verizon Communications, merging Bell Atlantic and GTE.

Jim Crowe, Level 3 CEO, talked about a "unique and compelling fit" between the two companies in a statement. A conference call on Monday, after US Thanksgiving holiday celebrations, should shed further light on the deal.

Although it has invested heavily in a global IP fibre network, Level 3 remains a cash-rich company. This year Berkshire Hathaway, the investment vehicle of billionaire Warren Buffet, traditionally known for avoiding technology stocks, placed its faith in the alternative telco by buying a $100m stake. Other funds took $400m of holdings.