Gores Buys Alpheus, To Combine with First Communications

September 21st, 2011 by · 7 Comments

Of course, the moment I say that M&A seems to have dried up, the universe conspires to prove me wrong.  Alpheus Communications has found itself a private equity buyer.  The Gores Group has signed an agreement to purchase the company, which it intends to merge with another fiber operator it owns: First Communications.  Financial details were not disclosed, though I'll pass on any if I come across them later.

The combination of First Communications and Alpheus Communications is not one that I have ever pondered, as the two do not overlap in footprint.  Alpheus operates 2800 longhaul and 3250 metro route miles in the state of Texas, while First has its base in the Midwest and MidAtlantic.  However, as Zayo has taught us over the past few years, disparate fiber assets in the hands of the right managers and with sufficient funding can be formidable.  Both Alpheus and First have business models that combine metro and regional fiber, so there is definitely operational overlap.  This is probably the kind of deal that doesn't much threaten the rank and file when it comes to layoffs, as the combined company will likely be more aggressive and headcount synergies are both less available and less important to the merger.

Alpheus was rumored to be for sale back in the Spring of 2010, but I had heard nothing for quite some time on the subject and had assumed the effort had stalled.  With all the other deals that didn't happen this summer, I didn't really expect this one at this time.  But Alpheus is a nice asset in a hot fiber market, and Gores has long played in the fiber and data sectors, and thus is not a surprising buyer.    In fact, after buying Alpheus there's every reason to think they will strike again.

Categories: Mergers and Acquisitions · Metro fiber

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