Zayo Group to shell out $2.2B for AboveNet

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Zayo Group has moved to acquire AboveNet (NYSE: ABVT) for about $2.2 billion, continuing on its move to grow its service assets via acquisitions.

AboveNet's common stock issued and outstanding immediately prior to the purchase will be entitled to receive $84 per share in cash, a figure it says is a 13 percent premium over its closing price on March 16.

GTCR, a Chicago-based private equity firm, will make an equity investment in Zayo. Joining GTCR are Charlesbank Capital Partners, a current Zayo investor, which will make an additional investment in the service provider. Merging these two service providers makes sense. Both have gained reputations for providing very high bandwidth fiber-based connectivity to both businesses and a host of emerging wholesale network opportunities including wireless backhaul and data center connectivity.

However, this is far from a done deal. A 30-day "go-shop" provision allows AboveNet to talk to other suitors about proposals to purchase the company.

News of the marriage should not be all that surprising. Although AboveNet's President and CEO Bill LaPerch said they were thinking about expanding the service provider's reach by acquiring other service providers, analysts argued that it would be a good acquisition target because it has been profitable.

Other potential suitors could be Level 3 Communications (NYSE: LVLT), which last year acquired Global Crossing.

At the same time, Zayo announced last December that it raised $315 million in funding, part of which was used to finance its acquisition of the former 360networks.

If no other suitors make a bid for AboveNet, Zayo expects to complete the acquisition following customary approvals by the middle of this year.

For more:
- see the release

Special report: The most important M&As of 2011

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