Berkshire Partners, a Boston-based investment firm, on Thursday signed an agreement to acquire both Lightower Fiber Networks and Sidera Networks for $2 billion, creating a new service provider with a large on-net and metro fiber footprint.
The newly-combined company will be run by Rob Shanahan, Lightower's current CEO.
Both Pamlico Capital and ABRY Partners, which are separately major investors in Lightower and Sidera, will continue to hold large stakes in the new company.
"Once merged, we will offer customers more services, more routes and more access options with the same high levels of performance, diversity, reliability and support that our customers have come to expect from us," said Shanahan in a release announcing the merger.
After getting necessary regulatory approvals, Berkshire said the deal will be completed in Q2 this year.
What's significant about this merger is the amount of network assets that Lightower and Sidera bring to the table. In addition to having a strong presence in the Northeast, Mid-Atlantic and Midwest regions, both service providers have connections to critical international submarine cable system landing sites and exchanges.
Although Berkshire has not revealed what the new company would be called, current and new customers will be able to get access to over 20,000 route fiber miles and more than 6,000 on-net locations including commercial buildings, data centers, financial exchanges, content hubs and other interconnection facilities.
Prior to this merger, both Lightower and Sidera on their own had purchased a number of regional service providers to expand their fiber miles and on-net locations.
Complementing its own organic network buildouts, Lightower acquired regional fiber providers including Lexent Metro Connect, Veroxity and Open Access. Likewise, Sidera, which prior to this deal with Berkshire laid out plans for a major network expansion, acquired other providers such as Long Island Fiber Exchange and colocation provider Cross Connect Solutions.
This merger is also just one of several deals in which investment firms have taken charge of regional competitive fiber-based service providers. M/C Partners and Pamlico Capital acquired Lightower from electric and gas utility National Grid in August 2007, while ABRY Partners purchased the assets of RCN Corp. for about $1.2 billion in March 2010 and made the competitive cable operator private. Following the RCN acquisition, the company split the consumer and business divisions up and relaunched RCN Metro as Sidera Networks.
Given the ongoing consolidation of the competitive service provider market, news of this sale should not be all that surprising. In May 2011, a rumor emerged that both Sidera and FiberLight, another competitive fiber-based provider serving Virginia, Atlanta and Houston, were up for sale.
- see the release
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