Merger Anyone? Experts Share Financial Insights

Are you interested in raising capital, pursuing a merger or acquisition, or understanding how a company is valued? A group of finance experts will discuss such issues today during a panel at CompTel/ASCENT ’04.

Consolidation leads to higher valuations, resulting in a more favorable environment for raising capital, say the panelists of this session.

Analysts long have said companies need scale to compete more effectively and meet key financial metrics, objectives that can be attained through a merger or acquisition.

Banc of America Securities Managing Director Jim Broner, Nicole Cawley, managing director of global communications finance, GE Structured Finance, and David Parker, vice president of the telecom investment banking group at Daniels & Associates, are scheduled to discuss these issues in a panel moderated by Scott Widham, president of strategic carrier accounts with Broadwing Communications.

Widham says panelists are likely to discuss such topics as recent deals that have been struck and offer predictions as to which companies will be left standing in the coming years.

Broadwing executives can speak from experience.

Andy Backman, vice president of investor and public relations with Corvis Corp., the parent company of Broadwing, says Corvis purchased Broadwing for $70 million, a fraction of the $5 billion Cincinnati Bell invested. Then in March, Corvis announced an agreement to purchase Focal Communications Corp. in a $210 million agreement.

Backman says one of the reasons Corvis walked away from reaching a possible agreement to acquire Allegiance Telecom Inc. was that a potential deal became too expensive. XO Communications Inc. acquired Allegiance for $322 million in cash and approximately 45.38 million shares of XO common stock.

I think there was a short-term increase in valuations, Backman says.

Widham says Broadwing has been interested in some fiber assets but the price has not been right. Broadwing is not likely to purchase a national fiber-optic network since it already owns one; however the company is more inclined to express an interest in a regional network covering secondary markets, Widham says.

He says potential bidders in pursuit of an asset are more diligent these days. Companies used to sell assets based on a percentage of their annual revenue, Widham says, but that will not cut it anymore: Potential bidders are conducting a more thorough analysis of the asset.

Leave a comment

Your email address will not be published. Required fields are marked *

The ID is: 73252