Primus acquires Arbinet for $28 million in stock, sells European holdings

With a new management team in place, Primus Telecommunications is making its first big move by acquiring wholesale telecom exchange service carrier Arbinet Corp.

Although the deal still has to pass standard regulatory approvals and stockholder approval, the boards of directors of both companies have approved the merger and expect to close it in Q1 2011.

Upon completion of the deal, Primus will integrate Arbinet into Primus' Global Wholesale group. Through this process, Primus believes it will "add over $300 million in annual revenue and generate accretive cost synergies of $3 million to $7 million in each of the next two years." Primus added that it forecast its wholesale business segment to generate over $500 million in annual revenue, while bringing Primus' total consolidated annual run rate revenue to over $1 billion.

According to the terms of the merger agreement, Arbinet common stockholders will receive shares of Primus common stock in exchange for shares of Arbinet common stock in a $28 million stock-for-stock transaction.

Peter Aquino, Chairman, President and CEO of Primus said that the Arbinet deal is all about expanding its reach and eliminating operating redundancies. "Primus' new management team is focused on improving the company's operations, which in our view begins with making important decisions about where we can be most successful over the long term," he said in a release. "Given that scale is critical in the wholesale business, we made the strategic decision to add Arbinet's thexchangeSM and complementary international route capabilities, which we expect will benefit our combined international carrier customers as they look to outsource their wholesale needs to players of size."

Primus is also working with Akira Partners UK to sell its European assets in the UK, France, Belgium and Italy. Right now, the service provider has completed sales of its European assets in the UK, Belgium, Spain, Sweden, Switzerland and Italy.

From a bigger picture perspective, Primus' acquisition is part of a broader company restructuring that began last year when the service provider filed for Chapter 11 bankruptcy protection.

Since then, the company has been realigning its management team beginning with the appointment of former RCN President and CEO Peter Aquino, who left RCN after it was purchased by ABRY Partners, in October as its new leader. Not long after Aquino joined Primus, his RCN colleague Richard Ramlall joined the company as Senior Vice President, Corporate Development and Chief Communications Officer.

For more:
- see the release

Related articles:
Primus files for Chapter 11 bankruptcy
Bell Canada, competitive carriers fight over last mile network access

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