Telco paying $340 million for dot-com

LONDON — U.K. telco Cable & Wireless is buying U.S. Web outfit Digital Island for $340 million.

Shareholders in Digital Island, which provides services to media and entertainment clients such as the Financial Times and Sony, are receiving an 8.6% premium on Friday’s closing share price.

The San Francisco-based company lost $840 million in the past three months and C&W will have to assume $49 million in debt. Sales for the year ending Sept. 30 are expected to be around $145 million.

Digital Island offers B2B content delivery in the U.S., Europe and Japan, and will also manage consumer pay-per-view and subscription-based video services.

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