Lightower has agreed to buy fellow US fibre operator Fibertech Networks from Court Square Capital Partners for US$1.9bn.
The all-cash deal will be funded with new debt – already committed by JP Morgan and Highbridge Principal Strategies – and…
Lightower has agreed to buy fellow US fibre operator Fibertech Networks from Court Square Capital Partners for US$1.9bn.
The all-cash deal will be funded with new debt – already committed by JP Morgan and Highbridge Principal Strategies – and fresh capital from Lightower’s private equity-owners Berkshire Capital, Pamlico Capital and ABRY Partners.
Additional financials were not provided, but Wells Fargo analyst Jennifer Fritzsche expects the acquisition price was “north of 10x EBITDA” because Court Square “reportedly paid about 10x in 2010”.
Once the transaction closes, which the companies expect to occur in Q3, the combined operator will boast 30,000 route miles of fibre in the Northeast, Mid-Atlantic and Midwest.
This will give access to nearly 5,000 wireless towers and almost 13,000 locations, including commercial buildings, data centres and financial exchanges. Lightower’s CEO Rob Shanahan will lead the enlarged group.
Randy Peeler, managing director of Berkshire, said both companies “operate outstanding networks with distinct and complementary footprints” which made the tie-up “a natural fit”, and was upbeat on the merged company’s growth prospects.
Lightower is betting that providing its customers access to more services in more locations across a broader geographic area while also offering additional and diverse routes between locations will justify the decision.
Fritzsche said the deal would create a more formidable competitor to companies like Level 3 Communications.
“While Lightower will not have nearly the geographic reach or long-haul capacity of some larger competitors, it will have a strong metro fibre network, with nearly 13K high-margin on-net locations,” she wrote in a memo to investors.
Ropes & Gray is serving as legal counsel to Berkshire and Lightower.
Court Square is being advised by Evercore Partners and TD Securities on the sale, and Dechert is acting as its legal counsel.
