Continuing its rollup of advertising delivery services companies, DG FastChannel Inc. said Wednesday it would acquire the Vyvx LLC ad distribution business from Level 3 Communications Inc. for $129 million in cash.

The acquisition will enhance DG FastChannel's television advertising delivery service as it continues to build its stable of advertisers and ad agencies. The companies provide the conduit for advertisers to digitally deliver their advertisements to television stations. The business is expected to get a boost as television and cable operators convert to broadcasting digitally and in high definition (HD).

Shares of DG FastChannel were up close to 20% late in Wednesday's session after the company raised its financial projections for both 2007 and 2008.

DG FastChannel came together last year through a merger between DG Systems Inc. and FastChannel Network Inc. in a deal valued at $27.4 million. The Irving, Texas, company, which provides an online and satellite distribution network for more than 5,000 advertisers and agencies, has now made four ad distribution acquisitions this year.

In a statement, DG FastChannel said the deal also will better position the company for more investments in its next-generation digital media platform to provide advertising delivery services for TV, the Web and wireless devices.

"The key word is convergence," said James Leahy, an analyst with Morgan Joseph & Co. "As advertising moves to three screens - television, the Internet and mobile devices - and advertising agencies want to do integrated campaigns across all three, this deal gives DG FastChannel the scale to move forward."

Leahy said the purchase price was in line or even slightly less than the multiples DG FastChannel paid in other media distribution acquisitions it has made recently. In April the company acquired Pathfire Inc. for $29.3 million in stock, then purchased GTN Inc. for $11.5 million in cash in June. It also spent $48.7 million in cash and stock to acquire HD distribution firm Point.360 in a rolling takeover that was completed in August.

The latest transaction and DG FastChannel's bullish outlook represent another step in a strong combeback for the company. In early 2005, DG Systems' shares closed at 55 cents, the result of a year-long decline. But the merger with FastChannel helped the struggling company drum up acquisition currency and modernize its ad delivery technology.

Level 3 said it sold the Vyvx advertising distribution business because it was not considered a part of its core business, though it will retain a distribution partnership with DG FastChannel. For 2007, the business is expected to have adjusted Ebitda of $11 million on revenues of $36 million. Level 3 acquired Vyvx as part of a 2005 acquisition of telecom carrier WilTel Communications Group LLC.

The stakes for digital delivery of advertisements through the Internet were raised in the past year after Microsoft Corp. acquired online advertising firm aQuantive Inc. for $6 billion in May and Google Inc. agreed to buy interactive advertising leader DoubleClick Inc. for $3.1 billion.

That deal, however, remains bogged down by antitrust concerns.

Pooyan Mehdizadeh, Bryan Dow and Michael Klein of ThinkEquity Partners LLC provided financial advice to DG FastChannel. Latham & Watkins LLP served as legal adviser; the firm's team consisted of Rick Bernthal, William O'Neill, Allen Klein, Marc Williamson and David Della Rocca and associates Christopher Brown, Sapna Mehta and Jeffrey Manns. Level 3 did not use a financial adviser in the deal but relied on Willkie Farr & Gallagher LLP lawyers David Boston and Matt Guercio for legal advice.

To fund the acquisition and refinance an $85 million loan, DG FastChannel said it obtained a financing commitment from BMO Capital Markets for a sixÐyear, $145 million senior credit facility and a two-year, $65 million senior unsecured bridge loan.