Irvine’s VitalStream Holdings Inc., a maker of software for online video and audio, is being bought for $217 million by Atlanta-based Internap Network Services Corp.
Internap, which helps companies directly connect to the Internet, said the deal is expected to close in the first quarter.
The company plans to issue 12 million shares to VitalStream shareholders. Internap also will assume VitalStream’s stock option plans.
The deal is valued at $217 million as of Internap’s closing price on Wednesday. The company’s shares fell more than 9% on word of the deal.
VitalStream’s stock soared more than 20%.
The move comes after VitalStream said earlier this month it was losing sales from one of its key customers: online phenom MySpace.com, part of News Corp.
MySpace, which made up about 31% of sales, told Vitalstream it was going to develop its own media streaming software.
VitalStream posted sales of nearly $16 million in 2005, up about 60% from the previous year. It has a market value of $177 million.
