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Zayo Buys AboveNet for $2.2B to Improve Fiber Connectivity

March 21, 2012

Zayo, a provider of enterprise fiber based bandwidth services, has acquired AboveNet for an impressive bundle of $2.2 billion.

“AboveNet and Zayo’s business models are closely aligned with a disciplined focus on high bandwidth fiber-based communications services for enterprises, government and carrier customers,” said Dan Caruso, President and CEO of Zayo Group. “We have admired AboveNet’s business model and results and believe the combination will create value for customers, employees and investors.”

Also a provider of enterprise bandwidth services, AboveNet manages a fiber network of around 13,000 in metropolitan areas. Its business will be segued into Zayo’s 45,000-route-mile network in 42 states.

“The combination of AboveNet’s and Zayo’s assets creates a dense fiber footprint throughout North America and Europe for a bandwidth hungry world,” said Bill LaPerch, President and CEO of AboveNet. “This new company will be uniquely qualified to meet the expanding needs of enterprise and carrier customers.”

Under the agreement, each share of AboveNet common stock will be worth $84, a 13 percent premium over the company’s closing price March 16, and a 21 percent premium over the average closing price of a stock in the last 60 days.

As part of the deal, the Chicago private equity firm GTCR will make an equity investment in Zayo, and current investor Charlesbank Capital Partners will make an additional investment in the company.

“We have been looking for opportunities to make investments in the bandwidth infrastructure space and believe the exceptional leadership and assets of the combined company creates an excellent opportunity for our firm,” said Phil Canfield, Principal at GTCR.

Though the deal is expected to close mid-2012, AboveNet enjoys a 30 day “go-shop” provision and can entertain additional offers until April 17, subject to extension until May 2 under certain circumstances.

Founded in 2006 and based in Louisville, Colo., Zayo has had a total of $225 million in funding and reported a $3.6 million loss on $319.4 million for 2011. The company recently bought 360 Networks for $345 million.

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Filed Under: Finance

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