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President Clinton, ending a nearly two-month national security review, gave permission Aug. 23 for Japanese-government-owned NTT Communications Corp. to acquire Verio Inc., an Internet service provider based in Englewood, Colo. The president’s approval was the final hurdle in the $5.5 billion deal. The companies were expected to close the transaction shortly. NTT, 53 percent owned by the Japanese government, agreed in May to pay $60 a share in cash for Verio, whose stock traded at $59.75 per share shortly after the White House announcement. The deal had been held up for weeks by the Committee on Foreign Investment in the United States, an interagency group that reviews mergers that could threaten national security. It was the first time CFIUS considered a foreign takeover of an American ISP. The FBI initially lobbied CFIUS to recommend the president to kill the merger because it could let the Japanese government learn whom the U.S. government is wiretapping. After weeks of frantic negotiations, NTT is believed to have agreed to wall off from Japanese managers the parts of Verio that work with U.S. law enforcement. That, apparently, was enough to satisfy the FBI. According to a White House statement, Clinton deferred to the work of CFIUS. “As a result of the investigation and negotiations with NTT Communications and Verio, any national security issues that may have been presented by this transaction have been resolved,” the White House said in the statement. The president detailed the rationale for his decision in a report sent to Congress Wednesday. A White House spokeswoman declined to release a copy of the document, saying it was classified. The public statement lacked details about the government’s national security concerns or what NTT and Verio did to resolve them. Instead it primarily contained background information on the Exon-Florio provision under the Omnibus Trade and Competitiveness Act of 1988, which empowers the president to block a merger if there is “credible” evidence that foreign interests gaining control of U.S. assets would impair national security and if no other law would adequately protect national security. CFIUS sent the deal to Clinton on Aug. 14, asking him to approve it. The president had until Aug. 29 to decide. Copyright �2000 TDD, LLC. All rights reserved.

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