Last week, news broke across various media outlets that abvt has hired JP Morgan Chase to advise it on a potential sale of the company. Since then, I have seen lots of speculation about who might actually do the buying if such a deal came to pass. My own opinion is that CenturyLink probably has the most optimal combination of means, motive, and opportunity, but I am hardly the last word on the subject and others make solid cases for private equity, Verizon, TW Telecom, Level 3, and even Sprint. So here’s a poll of Rambling’s readers to help clarify the waters a bit, or perhaps muddy them further:
Who Is Most Likely to Buy AboveNetMarket Research
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Categories: Mergers and Acquisitions · Metro fiber · Polls
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ABVT cancels its presentation at the Cowen conference. No fire yet but the smoke is lowering visibility here….
one could argue that Level 3 original metro builds in tier 1 markets including extra conduits mirrors Abovenet making the large 2 bilion price tag not required. VZ has the large market east coast covered already making Abovenet largest value value to them minimized, ATT is tied up with T-Mobile maybe byut could be a player to strengthen there east coast. Centurytel, just how much dry powder can you have, embarq, qwest and Savvis already big $$ purchases being consumed they may need time. XO has same/similar metro footprint as Level 3 in tier 1 markets having done joint metro builds and have extra conduit as well. TWtelecom should be the largest company with interest and the $$$ available. Choice for them are XO and Icahn (bringing the lacking LH network and growth of metro footprints they need) vs Abovenet and the large price tag . I see XO as TW choice which fills two TWtelecom gaps and with less aggressive $$ being spent. Then a Private equity rollup of Abovenet and other players like Zayo/Sidera making very significant player for the future.
I think Enron Hubbard should swallow this sucker whole even if he has to overextend his purchasing boundary lines way above his eyeballs.
The poll results so far– a statistical dead heat between TWTC/LVLT and CTL– does not surprise. All three have reasons why this would make great sense. CTL and TWTC have the capacity to do an all cash deal while LVLT will have some real financing issues before that could happen. In situations like this it often boils down to the human element– who wants it the most? Who’s future does it impact the most? Who is willing to stretch the furthest and move most decisively?
If all three play (and perhaps others) it will be an interesting process, and I would have to increase my price guess to materially above $90 per share. In fact $90 is really a base given that PE can rationalize that sort of price (and they have about a 10% pricing disadvantage given a lack of combination savings). I have added ABVT to my “ST deal on the way” portfolio which raises the real potential that absolutely nothing happens and I get left with a “nice high multiple LT investment”.
If anything can be said about the results thus far, it’s that there is no consensus at all. I’m still trying to figure out the 8%+ who think Zayo has $2B in the wings and especially the 4% who voted for XO – which doesn’t exactly seem poised to spring at the moment.
I actually wonder if the one at the bottom, Sprint, shouldn’t be higher. Not to *buy* it, but remember that joint venture idea with Level 3? Could that idea not have AboveNet as the focus, where Sprint could keep the majority control it probably wants?
rob,
Unless Sunit was fibbing this a.m. you should take LVLT out of the ABVT sweepstakes. He said they are focused on GLBC integration and don’t expect another deal any time soon.
Well, that’s been my position all along. But people are allowed to disbelieve management! 🙂
Should they disbelieve him at the speed and ease of expense which they can directly connect bldgs. to their fiber rich factory while passing scores of valuable enterprise customers along the way? Just tens of thousands of dollars in order to attack LePerch in his nest. This is a man who sees no competition in his space, but he must be seeing Ghosts of Enron appearing to him in his sleep at night. Pass the hot potato along…….
Hard to see how AT&T can pass this up and remain relevant in Enterprise connectivity in the long run.
Has anyone considered Equinix?
I must admit, that’s the first time the thought has crossed my mind. Seems unlikely though, as it would poke a major hole in the veil of carrier neutrality.