Birch Communications has re-ignited its ongoing buying streak with a $323 million all-cash deal to acquire Cbeyond, creating a new company that will serve about 200,000 customers located in all 50 states, the District of Columbia, Canada and Puerto Rico.
Set to close within six months after getting customary federal and state regulatory approvals, the purchase has been unanimously approved by the boards of both companies.
Under the terms of the agreement, Cbeyond stockholders will receive between $9.97 and $10 per share in cash. The exact amount will be determined based on stock transactions related to previously granted stock awards to current employees that occur after execution of the definitive agreement.
Priced at $9.97 per share, Birch said that the purchase price is a 56.8 percent premium over Cbeyond's stock price on Nov. 5, 2013, the trading date before Cbeyond announced its process to explore strategic alternatives, and a premium of 40.8 percent over the closing price of Cbeyond's stock on Thursday, April 17, 2014.
This acquisition bolsters Birch from both a customer diversity and network standpoint.
It will now be able to serve an even larger range of customer types, including everything from startups and SMBs to multi-site enterprises that need a solution that can be delivered via multiple offices and data centers. From a network perspective, the combined company will have a nationwide network with about 10,000 fiber route miles, over 500 on-net fiber buildings, 570 colocation sites and five data centers.
"The combined company will have a nationwide IP-network with a significant fiber infrastructure, an extensive data center presence in multiple markets, and a relentless focus on providing superior customer service," said Vincent M. Oddo, president and CEO of Birch, in a release.
Cbeyond's deal to be acquired by Birch follows its board's formation of a strategy committee last year to explore ways to accelerate "Cbeyond 2.0 growth and explore strategic alternatives, to enhance stockholder value more quickly than by pursuing the Company's organic growth and transformation."
Some of these alternatives included acquiring other companies themselves, joint ventures and other strategic arrangements or selling the company.
Over the past seven years, Birch has completed 21 acquisitions to expand its network and service reach. Prior to Cbeyond, the competitive provider struck deals last year to acquire Ernest Communications and Lightyear.
- see the release
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