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Cbeyond Snaps Up 2 Cloud Companies for $40M

November 04, 2010 - News

Cbeyond Inc. is drilling deeper into the cloud with two new acquisitions.

The Georgia-based IP CLEC said on Wednesday it has purchased the assets of MaximumASP and the outstanding stock of Aretta Communications for a combined $40 million. Both companies were privately held.

Cbeyond paid about $33 million cash at closing and will pay the remaining $7 million “upon achieving certain future milestones," the company said in a press release. Together MaximumASP and Aretta are expected to generate approximately $12 million in 2010.

IT and communications service provider Cbeyond serves 55,000 small businesses. It said the acquisitions of MaximumASP and Aretta strengthen its cloud-computing focus, expands its footprint, gives it new Web distribution and adds to its reseller channels. Cbeyond further gains a 33,000-square-foot data center.

"We believe that small businesses will be increasingly outsourcing their IT hardware and services to the cloud and that Cbeyond can play a key role in enabling this trend," Jim Geiger, CEO of Cbeyond, said in a prepared statement.

Shares of Cbeyond were down more than 7 percent to $13.04 by 3:22 p.m. Eastern on Thursday as investors reacted to the M&A news, and lower-than-expected third-quarter earnings. On Wednesday, Cbeyond reported a net loss of $0.1 million, or 3 cents per share, 2 cents more than Wall Street had forecast. Revenue, though, rose 7.1 percent to $113.5 million.

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