The enterprise-focused telecommunications space is set to consolidation as Birch Communications announced plans to acquire Cbeyond for approximately $323 million. Birch provides communications, cloud and managed services, while Cbeyond provides IT infrastructure, including wholesale wireless services.
The proposed deal will merge the Atlanta-based companies into what Birch claims will be a “nationwide communications, cloud and managed services provider with approximately $700 million in annual revenue and approximately 200,000 business customers located in all 50 states, the District of Columbia, Canada and Puerto Rico.” The merged entity will control approximately 10,000 fiber route miles, more than 500 fiber-lit buildings, 570 collocations and five data centers.
Birch added that the proposed deal will be its 21st acquisition in the “recent years” as it looks to “meet the evolving, long-term needs of our business customers.”
For Cbeyond, the proposal ends a six-month strategic review in which the company said it “evaluated a wide range of alternatives in addition to a sale. “We have been strengthening the Cbeyond franchise with our 2.0 transformation; the wider reach with Birch enables the combined companies to increase service levels with a broad array of products to a larger number of customers,” explained James Geiger, founder, chairman of the board and CEO of Cbeyond.
The deal has been approved by the board of directors at both companies and subject to regulatory approval and a vote by Cbeyond stockholders, is expected to close within six months. The proposed acquisition price values Cbeyond’s stock at near $10 per share, or more than a 56% premium compared with the company’s stock price in early November when the company first announced plans for a strategic review.
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