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Entries in Deal Advisor (60)

Wednesday
Oct212015
DateWednesday, October 21, 2015 at 2:50PM

Cologix Announces Acquisition of Net Access, a New Jersey Data Center Company

On Tuesday, October 20th, Cologix announced that it had agreed to acquire Net Access, LLC.  Cologix is a network neutral interconnection and data center company.  Net Access is a colocation and workspace recovery provider. 

Transaction Facts

  • Net Access has over 200,000 gross sq. ft. amongst its 3 enterprise-grade Northern New Jersey facilities.
  • Net Access has over 700 customers. 
  • Net Access data centers are interconnected to a dark fiber network that connects them to carrier hotels in the Greater NYC region.
  • Cologix has approximately 21 data centers and over 900 customers.

Strategic Considerations

  • Grant van Rooyen, President and CEO of Cologix, commented on the transaction saying “We have been very impressed with the team and operations Net Access has built and look forward to harnessing the strength of the combined company.”
  • Transaction gives Cologix access to Net Access’s customers which range from small businesses to Fortune 1000 companies. 
  • Acquisition gives Cologix further entry into the growing New Jersey market.
AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Wednesday
Oct212015
DateWednesday, October 21, 2015 at 1:27PM

Windstream Announces Sale of its Data Center Business

On Monday, October 19th, Windstream (NASDAQ: WIN) announced that it had reached an agreement to sell its data center business to TierPoint for $575.0 million in an all-cash transaction.  Windstream was among the first of the telcos to move into the data center space, acquiring Hosted Solutions for $320m in 2010.

Transaction Facts

  • TierPoint is a national, leading provider of cloud, colocation and managed services
  • Combined operations will serve 4,500+ customers with approximately 500,000 sq. ft. of data center capacity in 19 U.S. markets.
  • Transaction has already been approved by both boards and is expected to close within the next 2-4 months.

Strategic Considerations

Transaction will result in Windstream establishing a continuous, reciprocal, strategic relationship with TierPoint as both companies will sell their products and services to one another’s prospective customers as referral partners.

  • Along with the spinoff of its network assets into a REIT earlier in 2015, the data center sale is consistent with Windstream’s continuing effort to delever its balance sheet.
  • Jerry Kent, Chairman and CEO of TierPoint, commented on the transaction and referral partner agreements saying “This is a great strategic fit for TierPoint and our customers.”

JSICA’s Take

  • Transaction has an EV/REV multiple of 4.3x and an EV/OIBDA multiple of 12.9x.
  • Transaction will allow TierPoint to continue to grow its data center business, which already consists of 13 data centers across 8 states.
  • Windstream will continue to generate revenue from data center sales through the referral partner agreement with TierPoint, maintaining a level of exposure to the high growth segment without owning and operating the physical data centers.
AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Thursday
Oct082015
DateThursday, October 8, 2015 at 11:42AM

Atlantic Tele-Network Announces Acquisition of Innovative Group of Companies

On Thursday, October 1st, Atlantic Tele-Network, Inc. (NASDAQ: ATNI) announced that it had acquired Caribbean Assets Holdings, LLC, the holding company for Innovative Communications Corporation (ICC) that provides cable TV, Internet and landline services primarily in the U.S. Virgin Islands.  ATN acquired the assets from the National Rural Utilities Cooperative Finance Corporation (CFC). 

Transaction Facts

  • ATN will pay approximately $145.0 million for the transaction.
  • The deal will be financed primarily with $85.0 million payable in cash and the option to finance the remaining $60.0 million of the purchase through a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative (RTFC).
  • Deal is expected to close in mid-2016.

Deal History

  • In 2006, ICC was forced into involuntary bankruptcy after defaulting on RTFC loans; RTFC had loaned more than $500m to ICC between 1987 and 2001.
  • CFC purchased ICC’s assets through bankruptcy in 2010.
  • ICC majority shareholder Jeffrey Prosser appealed the sale to CFC to the Virgin Island Supreme Court, which upheld the sale to CFC in 2012.
  • Prosser co-founded of ATN in 1987 with Cornelius Prior Jr., current chairman of the board for ATN.
  • Prosser and Prior led ATN’s acquisition Virgin Island Telephone Company (Vitelco).
  • Management differences at ATN led to a split of the company’s assets with Prosser retaining Vitelco (dba Innovative).

Financial and Strategic Considerations

  • ATN is a provider of telecommunication services to rural, niche and other under-served markets and geographies in the United States, Bermuda and the Caribbean and owns and operates solar power systems in select locations across the United States. 
  • Enables ATN to offer quad play--wireless, broadband, cable and wireline telephone—in U.S. Virgin Islands. 
  • ICC’s company-wide operations revenue was approximately $100.0 million for its most recently completed fiscal year that ended May 31, 2015.

JSICA’s Take

  • The EV/TTM Rev in this transaction represents an implied multiple of 1.5x, a discount to recently observed ILEC deals in the U.S.    
  • Deal signals ATN’s desire to expand its operations in Caribbean after winding down is U.S. based wireless operations in recent years
  • ATN subsequently announced that it had agreed to acquire 51% of Bermuda based KeyTech Limited providing entry into the Cayman Islands market
AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Friday
Sep182015
DateFriday, September 18, 2015 at 5:40PM

Altice Pays $17.7b for Cablevision, Doubles Down on U.S. Cable

French telecom firm Altice announced on Thursday, September 17th that it had agreed to acquire Cablevision Systems Corporation (NYSE:CVC) at a headline price of $17.7b, or $34.90 per share.  The deal comes on the heels of Altice’s May purchase of Suddenlink for $9.1b, which marked its entrance into the U.S. cable market.  The combination of Suddenlink and Cablevision represents the 4th largest cable operator in the U.S. and continues the trend of large-scale M&A amongst U.S. cable operators.

Valuation Analysis and Deal Metrics

Transaction Facts

  • BC Partners and CPP Investment Board, from which Altice acquired its 70 percent stake in Suddenlink,  have an option to participate for up to 30 percent of the equity of Cablevision
  • $900m in annual synergies anticipated  
  • Expected close 3Q16-4Q16

Strategic Considerations

  • Provides greater scale to realize cost synergies across Suddenlink and Cablevision
  • 65 percent take rate of triple play services drives industry-leading ARPU of $155
  • Highly competitive network that is 100 percent digital, offering triple play--video, broadband and VoIP—throughout service area

JSICA’s Take

After Altice scooped up Suddenlink in May, we indicated that more U.S. cable deals were on the horizon for the acquisitive French telecom giant.  Cablevision, an oft-rumored takeover target in recent years, was a logical target.  At multiples of 2.8x trailing revenue and 6.9x pro forma EBITDA, Cablevision was less expensive than Suddenlink (3.9x revenue/8.1 pro forma EBITDA)—the discount largely attributable to Cablevision’s inability to deliver meaningful revenue and EBITDA growth over the past five years.

Existing high penetration rates and strong in footprint competition from Verizon will make it challenging for Altice to accelerate Cablevision’s top line growth, but founder Patrick Drahi is confident that between network modernization, the streamlining of operations and consolidation of management, there is ample room for cost savings--$900m worth to be exact.

The deal marks continued consolidation of U.S. cable/broadband providers in 2015, particularly amongst mid-sized operators.  Deal multiples averaging a lofty 3.6x revenue and 8.0x pro forma cash flow could entice the remaining regional/mid=sized cablecos to sell.  And with Altice looking to increase its overall revenue mix to 50 percent from its U.S. operations, there is at least one motivated buyer in the market. 

AuthorAdam Brissette | Comments Off | | | Print ArticlePrint Article
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Friday
Sep042015
DateFriday, September 4, 2015 at 4:30PM

Momentum Telecom Announces Acquisition of Alteva

Introduction

On Wednesday, September 3rd, Momentum Telecom announced its acquisition of Alteva (NYSE: ALTV).  Alteva’s main focus today has been on cloud-based UC on a BroadSoft platform. 

Transaction Facts

  • Transaction is for approximately $28.7 million.
  • As a result of the transaction, Alteva shareholders will receive $4.70 per common share, once the deal closes, which is expected to be during Q4 2015. 
  • Transaction will give Momentum additional scale.

Strategic Considerations

  • Deal increases Momentum’s user count to over 250,000.
  • Improves the company’s marketing and sales initiatives.
  • Delivers value in the form of support to existing and new customers.
  • Bill Fox, President & CEO of Momentum commented on the transaction saying “The combined strengths of these two companies further enhance Momentum Telecom as a market leader in the VoIP and unified communications industry.”

JSICA’s Take

  • Adds to the consolidation that has been occurring in the VoIP and unified communications industry.
  • TTM Revenue as of June 30, 2015 was approximately $30.39m, which implies a revenue multiple of 0.9x.
  • Cash flows from operations have been negative for several years. Alteva’s TTM OIBDA for the quarter ending June 30, 2015 was ($2.97 million).
  • Alteva was formally Warwick Valley Telephone Company (WVTC)
  • The transaction represents a 31% premium to Alteva’s closing share price on 9/2/2015.

Alteva Timeline

AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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