RCN Business (NASDAQ:RCNI, news, filings) has withdrawn its bid for ftgx, leaving Zayo with a clear path again. Zayo and Fibernet first announced a tentative deal at the end of May for $11.45 per share, but the terms left until mid June for a better offer to appear. RCN made what might have been such an offer at $12.50 per share just before the deadline, which seemed to indicate a bidding war might ensue.
That appears not to be the case any longer, as Fibernet will now continue to pursue the Zayo deal. It is not yet clear why RCN chose not to pursue this deal. I had thought that given the territorial overlap with RCN Metro, the company's metro fiber division, RCN might have been able to find greater synergies. However, the likeliest case seems to be that incompatabilities became clear during discussions, and perhaps the integration of the two would not have been as easy as hoped. The other possibility is that RCN wished to get outside funding, and did not find it at a price low enough to facilitate a deal.
Zayo of course is a different case, they have less overlap both in geography and business model - for them it is an expansion moreso than a consolidation. They have had more time to look at the fit and have less to integrate, and thus are probably still comfortable with their original concept. Now that this little dustup is over, perhaps we will see Dan Caruso comment on the acquisition over on Bear on Business?
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