AboveNet (NYSE: ABVT), a provider of fiber-based network services that start at 100 Mbps and above for high-demand clients like financial institutions and universities, could be a possible acquisition target.
What's making AboveNet attractive to potential buyers is that the service provider is actually profitable and does not carry as much debt as it competitors like Level 3, which is in the process of buying Global Crossing. In Q1 2011, AboveNet reported revenues of $114.4 million, up 17.7 percent from $97.2 million for the first quarter of 2010.
In addition to private equity firms, AboveNet could be an attractive asset for Tier 1 telcos like Verizon and AT&T that are both continually building out their networks to support the burgeoning demand for data center and cloud-based services.
While neither AT&T nor Verizon would comment on any potential interest in buying AboveNet, financial analysts like Mark Kelleher of Dougherty & Co. believe that anyone that does make a play for the service provider might have to pay $100 per share.
Colby Synesael, a New York-based analyst at Cowen concurred that "whoever is going to buy AboveNet would have to write a very big check," adding that "AboveNet makes the most sense because they're a pure play and an infrastructure provider."
After emerging from bankruptcy in 2003, AboveNet has continued to grow out its fiber networks in both the U.S. and in Europe to assist large enterprises in interconnecting remote data centers. This business will likely grow with the ongoing growth of cloud computing, a trend that Gartner says will be a $148.8 billion market opportunity in 2014.
- Bloomberg has this article
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