Pacnet Declares Its Hunger

December 13th, 2008 by · 7 Comments

In an article on Bloomberg, Pacific telecom and undersea-cable operator Pacnet made some noise. As noted on this blog, Pacnet has been increasingly aggressive lately and has been rumored to be on the M&A trail with a bid for AAPT. It turns out that the interest there was real, CEO Bill Barney admitted strong interest in buying the company, although he said no bid had been made.

Barney went further though, with this bit from the Bloomberg article:

“We’ve been looking at acquisitions not only in Australia, but also in Japan, China and India,” Barney said. “We call them players in the content delivery space and we’ve been quite active in the last few weeks.”  Pacnet’s acquisition targets include two listed companies, the executive said, declining to identify them.

Wow. Pacnet wants to buy a CDN? That's actually pretty surprising to me, because I just don't see the synergies. But hey, if the man wants a CDN and he has the money, I'm game. So who could he buy? Dan Rayburn points to the obvious candidates: Asian CDN powers CDNetworks and ChinaCache. While those surely are the cream of the crop and I'm sure Barney would love to run them, I actually doubt that Pacnet could pull off a buyout of either one.  Neither CDN needs to sell, they would be fairly expensive. If Pacnet were to make a move, I think it would be for a smaller, more desperate CDN with a presence in the region - although I don't actually have anyone in mind, yet.

Pacnet also delayed its rumored IPO plans for a year. No surprise there, this ranks amongst the worst conditions I have ever seen for a telecom IPO. The private equity behind Pacnet wants liquidity badly I'm sure, but they're not crazy. And that leads me to believe that Pacnet's vocal M&A plans may be more bluster than hunger, with an aim to raising the company's profile with a little bravado while the rest of the sector is running scared. Or maybe not, all they have to do to prove me wrong is buy something! 🙂

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Categories: Content Distribution · Mergers and Acquisitions · Undersea cables

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7 Comments So Far


  • Michael Fox says:

    Look at the other posts … PacNet has a team of publicists and not much else to talk about. I have never seen such a small operation (less than 800 people and probably less than $US400M sales in total) make so much noise about so little !

    As accurately predicted they have done nothing and have started their own “CDN” … I guess in a broom closet somewhere.

    At some point these PacNet stories get boring … little like the boy who cried wolf !

    A fully inflated balloon is still a full of hot air and these stories definitely smack of hot air !

  • Rob Powell says:

    Actually, their CDN has turned out to be a reselling agreement with Internap, so the broom closet is still available for other uses!

  • Michael Fox says:

    Well put … interesting to watch PacNet as they hype their presence and aggressiveness. Is there some sale in the offing where they are building perceived value ? Bahti perhaps ?

  • Peter Martin says:

    I commented on another blog about the hype coming from PacNet these days … they brewed up a strom about a proposed purchase of AAPT which seemed to be some weird fantasy and they moved back to AAPT pitch only last month.

    I can tell you AAPT has never heard of them and this is now publically backed by this article n the Dominion Post by Paul Reynolds just this last week ..

    Telecom chief executive Paul Reynolds said suggestions Asian telco Pacnet might acquire Telecom’s Australian subsidiary AAPT should be taken with a pinch of salt.

    Pacnet chief executive Bill Barney said Pacnet was interested in acquiring AAPT, but felt the valuation of Australia’s No3 phone company had come down since December, when it reportedly offered A$420 million (NZ$520m) for the company.

    Mr Reynolds told The Dominion Post no offer had been made for AAPT.

    “Pacnet are trying to buy telcos on four continents, yet no-one has ever heard of them.”

    Guess there are some red faces at PacNet in getting caught out.

  • Rodger Pinaroc says:

    Hey Peter … this was in the Manila Bulletin today …

    “Mr. Barney said Pacnet already owns the biggest submarine cable network in the world .

    “What we will be looking at is further expansion and a 25 percent growth this year,” Barney said. The executive said Pacnet has some US$300 million to spend on its acquisition and expansion efforts.”

    Biggest cable system in the world, 25% growth in this economy (as well as AAG and IA coming on line this year) and another $US100Million for acquisitions (up from his March 29 press conference) …. believe it or not !

  • David Stevenson says:

    Rob,

    Saw this from another link on PacNet’s current rumored sale to China Telecom … guess you were absolutely right nearly 6 months ago when you said “Pacnet’s vocal M&A plans may be more bluster than hunger, with an aim to raising the company’s profile with a little bravado”.

    As an institutional investor I was following the PacNet news and their proposed IPO but had long ago flagged some serious overstatements in their press releases which suggested lack of realistic strategy.

    Frankly, if they were a listed entity their hyperbole would cause the regulators some serious heartache but, like a lot of PE funded ventures, they can play loose and fast with the facts with very little repercussion.

    The other mainstream industry media simply eat up this hype without any analysis or insight as all. All other articles in the mainstream treated these “good news” press releases as absolute truth – keep up the good work and this is a reason you have such a strong industry following !

  • Rob Powell says:

    David, thank you for the kind words! These days the mainstream media ignores all tier-2 and smaller operators worldwide unless they do something outrageous, and even then they don’t bother to do their homework. Perhaps Pacnet has been taking advantage of this inattention.

    It’s a far cry from 8-10 years ago when everyone cared about this stuff eh? I don’t get it right all the time, but I do at least try to pay attention… 🙂

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