President's Day was the occasion for yet another fiber network M&A move. Lumos Networks has found a buyer. EQT Infrastructure has entered into a definitive agreement to purchase the company in an all cash transaction.
Lumos Networks was spun off from nTelos back in the fall of 2011, and has since transformed itself into a regional fiber power throughout the mid-Atlantic. In the company's five plus years as a public company, it added substantially to its regional fiber network in Virginia, building a deep metro footprint in Richmond and reaching all the way down into new territories in and around Virginia Beach. Today they have more than 2100 on-net buildings across the region on a network spanning 9,000 route miles.
Most recently, the company acquired Clarity Communications Group, expanding southward into the Carolinas. They had been working on separating the remaining legacy ILEC business, but the company has been considering its broader alternatives for some time. With EQT taking the company private, Lumos will have new flexibility when it comes to funding its regional expansion.
How they go about that further expansion will be something to watch. One of the trends we have seen in the last few years is for private equity to buy a regional operator and then use it as a platform to consolidate neighboring regional operators as well as to invest in organic opportunities. This may just be the first phase of such a plan by EQT.
EQT will be paying $18 per share to acquire Lumos, an 18.2% premium above where the stock price closed on Friday. That works out to a total purchase price of about $950M. The purchase is expected to close sometime in the third quarter of this year.