Covad sells to private equity firm for $304 million

Communications services company Covad becomes the latest technology company to sell to a private equity firm

Platinum Equity will acquire Covad Communications for about $304 million, making the communications services company the latest technology company to sell to a private equity firm.

Platinum will pay $1.02 in cash per share for Covad, a 59 percent premium over Covad's closing price Friday on the American Stock Exchange, the companies announced Sunday. The acquisition is expected to close by the end of the second quarter of 2008.

San Jose, Calif.-based Covad provides voice and data services such as VoIP and DSL to businesses, specifically small and medium-sized enterprises (SMEs).

In June, Covad cut 8 percent of its staff as part of a restructuring that also saw the company take a $1.5 million charge for Q2 2007.

It is due to report third-quarter results Tuesday. The company reported a loss of $11.6 million for the second quarter of this year.

Private equity firms have been particularly active in acquiring technology companies this year. TPG Capital and Goldman Sachs bought Alltel in May for $27.5 billion, with TPG and Silver Lake Partners snapping up Avaya for $8.2 billion just a few weeks later.