There is some significant M&A news to report this morning, and the seller is none other than Lumen Technologies. Lumen has signed a definitive agreement to sell its Latin American business for $2.7B to the money guys over at Stonepeak.
Lumen's Latin American business derives from the old Global Crossing days. Global Crossing built out subsea cables circling the continent back in the bubble days, and later followed up with the acquisition of Impsat to build out a terrestrial business to go with it. Those assets later landed in the Level 3 portfolio, which then became part of the CenturyLink (now Lumen) international footprint. As part of Global Crossing and Level 3 the business was a pretty steady performer.
The deal monetizes Lumen's LATAM business at about 9x the 2020 adjusted EBITDA, which a little math says must have been about $300M. Lumen will redirect the proceeds back into its other growth areas, debt reduction, and possible share repurchases. The company and its soon to be independent subsidiary will enter into reciprocal reselling and network arrangements of course.
Meanwhile, Stonepeak is preparing to invest heavily in the business. The division's current president, Hector Alonso, and the current management team will remain in place. AustralianSuper is also participating in the deal, investing alongside Stonepeak. The deal is expected to close in the first half of 2022.
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