Consolidation fever struck again late Thursday as Time Warner Telecom Inc. announced it has snapped up Xspedius Communications LLC, a privately held CLEC based in Missouri, for $531.5 million.
The deal is expected to close within the next six months. Time Warner Telecom will pay $212.5 million in cash and $319 million in shares of its Class A Common Stock. Time Warner Telecom will not assume any debt in the acquisition.
During a conference call on Friday morning with journalists, Time Warner Telecoms president, chairman and CEO, Larissa Herda, said her company is after Xspedius metro fiber. They are not really leveraging their fiber assets, she said, noting that pursuing customers in the large enterprise market is expensive. She said Time Warner Telecom will work with its new company to target larger customers and offer more sophisticated bundles.
Tier 2 markets really sing for us, she said.
Xspedius fiber network provides metro Ethernet, local and long-distance voice, data and dedicated Internet access services, in 43 markets across 18 states and the District of Columbia. Herda said Xspedius metro fiber reach gives Time Warner Telecom the chance to overlay its products onto those networks, thereby upgrading Xspedius bundled services so revenue per customer increases.
Executives would not go in-depth about layoffs or sales strategies except to say Xspedius salespeople are eager to start selling Time Warner products.
The enhancements this merger brings will provide our customers new and expanded service opportunities, said Paul Pierron, president and CEO of Xspedius, in a statement. The combination of these two companies solidifies Time Warner Telecoms position as a leading national provider of network services to enterprise customers.
Meanwhile, Xspedius largest shareholder, Thermo Capital Partners, has committed to continuing as a long-term shareholder in Time Warner Telecom and offered a cash election to other Xspedius shareholders, Time Warner executives said. Thermo Capital will not have a seat on the Time Warner Telecom board.
The transaction has been approved by the required majority consent of equity holders of Xspedius Communications and does not require a Time Warner Telecom shareholder vote.
Evercore Partners acted as financial advisor to Time Warner Telecom, and Wachtell, Lipton, Rosen & Katz and Faegre & Benson acted as legal advisors. Brown Brothers Harriman acted as financial advisor to Xspedius Communications and Taft, Stettinius & Hollister acted as legal advisor.
Time Warner Telecom stocks were up 74 cents during mid-afternoon trading on Friday, at $16.67.
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December 14 2018 @ 18:50:05 UTC