ZAYO Group, a privately-owned fibre-based provider of bandwidth, yesterday agreed to acquire AboveNet for $2.2bn (£1.38bn), after making an offer at $84 a share, 13 per cent above AboveNet’s previous closing price.
But shares in AboveNet rose 14 per cent to $84.45 after the announcement, indicating investors expected a better offer.
“AboveNet and Zayo’s business model are closely aligned with a disciplined focus on high bandwidth fibre-based communications services for enterprises, government and carrier customers,” said Dan Caruso, president and chief executive of Zayo Group.
Bill LaPerch, president and chief executive of AboveNet, added: “The combination of AboveNet’s and Zayo’s assets creates a dense fibre footprint throughout the US and Europe for a bandwidth hungry world. This new company will be uniquely qualified to meet the expanding needs of enterprise and carrier customers.”
As part of the transaction, GTCR, a leading Chicago-based private equity firm, will make an equity investment in Zayo.
The transaction is not subject to any financing conditions. Morgan Stanley Senior Funding and Barclays have committed to provide Zayo Group with sufficient committed debt financing.
The agreement contains a 30-day “go-shop” provision, in which AboveNet has the right to solicit and enter into discussions with respect to alternative acquisition proposals until 17 April.
“As far as looking at prime metro fibre assets, AboveNet is head and shoulders above any of the little companies that [Zayo] can look at,” analyst Donna Jaegers of brokerage DA Davidson & Co said.
JP Morgan acted as lead financial advisor to AboveNet, with Moelis acting as co-adviser.
Wiggin and Dana LLP is serving as AboveNet’s legal adviser. Willkie Farr & Gallagher LLP is serving as legal counsel to AboveNet’s board of directors.
Latham & Watkins LLP and Gibson Dunn & Crutcher LLP are serving as GTCR’s and Zayo’s legal advisers, respectively.
City A.M. Reporter