Well, they managed to keep this one secret from me. In a blockbuster announcement this morning, privately held metro fiber operator Zayo Group (news, filings) is buying its larger publicly held neighbor, abvt. The purchase price will be approximately $2.2B, or $84 per share. That's a 13% premium above AboveNet's closing price on Friday.
The purchase will give Zayo a laundry list of things it did not yet have after nearly 20 prior acquisitions. First, their presence will become truly national, as AboveNet's intercity backbone goes down to a young metro fiber presence in Miami. Second, it will give them a full Tier-1 presence, whereas they have only dabbled in most of the big markets thus far. Third, it will give them a foothold in Europe - a strong London presence plus the assets AboveNet has recently been building out on the continent.
Zayo will of course be raising money to make this purchase. They will be gaining at least one new private equity partner, as Chicago's GTCR will be putting money into the company, and CharlesBank Capital will be adding more to its position. Meanwhile, Morgan Stanley and Barclays will be supplying debt financing.
But it's not quite a done deal yet. AboveNet has a 30-day “go-shop” provision, in which it can solicit other buyers. Now that Zayo has made its bid, I wonder if other bidders will jump off the fence - tw telecom comes, nay leaps to mind.
More later when I've had a chance to fully digest this news.Mergers and Acquisitions · Metro fiber