Savvis Communications sees its acquisition of bankrupt Cable & Wireless America as an opportunity not only to double its customer base but to accomplish something neither company has managed to do alone: turn a profit.

Savvis was one of seven companies to bid on C&W's domestic assets in an auction facilitated by the U.S. Bankruptcy Court for the District of Delaware. C&W filed for Chapter 11 protection in December. The bidders included Gores Technologies, which had an asset purchase agreement in place before C&W's bankruptcy filing. But Gores' bid of $125 million came up short.

Savvis is set to pay $155 million for C&W and assume $12.5 million in liabilities. Savvis CEO Rob McCormick says the combined companies will create the largest managed IP service provider for business users.

"The two companies have enough scale to be highly profitable," McCormick says, noting combined revenue of $700 million. "Together we're going to have a massive IP infrastructure company that . . . is unmatched in the industry."

But neither company is profitable today. Savvis posted more than $100 million in losses in the first three quarters of 2003.

Lack of profitability is a key reason why C&W ditched its American unit. Executives at the company said before filing for bankruptcy that C&W America was losing $1 million per day.

C&W America's parent company decided to cut its losses in June when the company publicly stated it would exit the U.S. market. That retreat came after the company invested $2.9 billion in acquiring MCI's Internet backbone in 1998, as well as content delivery network provider Digital Island and Web hosting provider Exodus in 2001.

While C&W had a hard time combining these assets with its legacy data business, McCormick says C&W America is a "huge opportunity for us."

Savvis' assets include an IP network that spans 110 cities in 45 countries, six managed data centers, 800 employees and 4,700 business customers.

The service provider takes over C&W's entire U.S. backbone network, 15 Web hosting data centers, 1,160 employees and reportedly 5,000 business customers.

"We do not have plans to further downsize [C&W]," McCormick says. "But there will be some consolidation between the two companies in back-office functions over time."