UPDATE 1-DG FastChannel to buy Vyvx advt business from Level 3

(Recasts, adds details, share movement)

Dec 19 (Reuters) - DG FastChannel Inc (DGIT.O) on Wednesday said it agreed to acquire the Vyvx advertising services business from Level 3 Communications Inc (LVLT.O) for $129 million in cash to expand its revenue and national client base.

The company, which provides media services to advertising and broadcast industries, said it raised its 2007 and 2008 pro forma revenue outlook, excluding the results for the Vyvx acquisition.

Shares of DG FastChannel were up 19 percent at $21.80 in pre-market trade on the Nasdaq. They had closed at $18.31 Tuesday.

For 2007, the company sees pro forma revenue of $116 million to $118 million, up from its previous view of $110 million to $113 million.

The company now sees earnings before interest, taxes, depreciation and amortization (EBITDA) of about $39 million, compared with its prior view of $37 million to $39 million.

For 2008, DG FastChannel sees revenue of $126 million to $130 million, up from its prior view of $122 million to $126 million.

The company sees 2008 EBITDA of about $44 million to $48 million, compared with its earlier view of $41 million to $44 million.

Separately, DG FastChannel said under the management of Level 3, the Vyvx advertising services operation is expected to generate about $36 million of revenue and $11 million of EBITDA for the year ending Dec. 31, 2007.

It expects to close the Vyvx acquisition during the first quarter of 2008. (Reporting by Avishek Mishra in Bangalore; Editing by Deepak Kannan)