This morning brings an interesting but somewhat difficult to parse M&A in the service provider space. Lingo has announced an agreement to acquire Impact Telecom.
Lingo is buying Impact in and all cash deal that will create a combined company with $175M in annual revenue and $24M in EBITDA. That will raise Lingo's existing annualized EBITDA into positive territory to $22M.
If you're wondering who Lingo is, they were carved out of Birch Communications two months ago when Fusion closed its deal for that company. The Lingo brand itself derives from Primus, which Birch Communications bought in 2016. Lingo is still owned by Birch Equity Partners, which also owns 75% of Fusion. Both Lingo and Birch Equity Partners are currently led by former Birch Communications CEO Vincent Oddo. Fusion bought the cloud and business services division, while Lingo started out with the SMB and consumer voice and broadband piece backed by 4 national PoPs, 120 route miles of fiber, and 120K customers.
For its part, Impact Telecom merged with TNCI a few years back, bringing together brands like Excel, Matrix, and Trinsic while serving mainly the SMB and consumer segments with voice and broadband. So for Birch Equity Partners, the combination of Lingo and Impact represents their continued consolidation attempts in this sector, while their 75% ownership of publicly-traded Fusion can do targets larger customers with more cloud-heavy network and data needs.
The combined company will serve some 270,000 SMB, carrier, and consumer customers across North America. There will certainly be some integration work there, but given the CLEC roll-up heritage on both sides they'll certainly be ready to hit the ground running for that. Whether there are further consolidation plans beyond that will be something to watch.
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