Privately-owned Zayo Group is buying broadband provider AboveNet (NASDAQ:ABVT) for $2.2 billion to expand its fiber-based bandwidth footprint in North America and Europe.
The $84-a-share cash offer represents a 13% premium over AboveNet’s closing price on March 16. Both company’s boards of directors have approved the transaction.
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Louisville, Colo.-based Zayo group, which has been buying up fiber infrastructure assets over the last five years, said its business model is closely aligned with AboveNet’s.
“The combination of AboveNet’s and Zayo’s assets creates a dense fiber footprint throughout North America and Europe for a bandwidth hungry world,” AboveNet CEO Bill LaPerch said in a statement.
As part of the deal, Chicago-based private equity firm GTCR will make an investment in Zayo, and one of the company's existing investors, Charlesbank Capital Partners, will increase its current investment.
White Plains, N.Y.-based AboveNet has 30 days to solicit and enter into discussions with other companies related to an alternative acquisition. The company is being advised by JPMorgan (NYSE:JPM) and Moelis & Co.
Some of its biggest competitors are telecom companies like Verizon (NYSE:VZ) and AT&T (NYSE:T).
The deal, subject to customary approvals, is slated to close in the middle of 2012.