Fibre infrastructure provider Zayo Group has agreed to buy AboveNet, a US company offering broadband connectivity services to businesses and carriers through its fibre network, for US$2.2bn.
Zayo said that it will pay US$84 for each share of AboveNet…
Fibre infrastructure provider Zayo Group has agreed to buy AboveNet, a US company offering broadband connectivity services to businesses and carriers through its fibre network, for US$2.2bn.
Zayo said that it will pay US$84 for each share of AboveNet common stock that is either issued or outstanding, effectively taking the company private.
The US$84 price represents a 13% premium over the closing price of AboveNet shares on 16 March.
The agreement also gives AboveNet a 30-day “go-shop” option, which allows it to enter into discussions with other potential acquirers. This is currently set to end on 17 April, but could be extended to 2 May.
Zayo said that Barclays and Morgan Stanley have committed to provide debt financing, which along with equity investments from PE firms GTCR and Charlesbank Capital Partners, will allow it to complete the acquisition and repay or refinance existing debt held by itself and AboveNet.
AboveNet’s CEO Bill LaPerch said: “The combination of AboveNet’s and Zayo’s assets creates a dense fibre footprint throughout North America and Europe for a bandwidth hungry world.”
The deal is expected to close in mid-2012.
AboveNet’s lead financial adviser is JP Morgan, while Moelis & Company is acting as co-adviser.
Wiggin and Dana LLP is serving as AboveNet’s legal adviser. Wilkie Farr & Gallagher LLP is advising the company’s board.
Zayo’s legal adviser is Gibson Dunn & Crutcher LLP.
Latham & Watkins LLP is advising GTCR.
In a note, Wells Fargo analyst Jennifer Fritzsche said that “larger telcos or other network service providers could be interested in [AboveNet] as [it] is considered to have some of the best fibre assets in the industry so it is possible that we could see interest from other acquirers”.
Fritzsche claimed that Corvex Management, the owner of 6% of AboveNet, had been “agitating” for a recapitalisation, share repurchase and sale. She said that Corvex had stated its belief that AboveNet stock is worth US$92-103.
AboveNet claims to have over 2.3 million fibre miles in its network. This covers multiple cities in the US, including New York and Los Angeles, and four major European centres: Amsterdam, Frankfurt, London and Paris.
