Fusion to Become Cloud Services Powerhouse with Birch Acquisition

Cloud Agreement

**Editor’s Note: Please click here for a recap of the biggest channel-impacting merger and acquisition news from July.**

Cloud services provider Fusion is acquiring Birch Communications‘ cloud and business-services business, including its customers, operations and infrastructure, in an all-stock transaction valued at about $280 million.

The combination is expected to create one of the largest cloud services providers in North America, with more than 150,000 business customers and a 100-percent IP-based network, including 30 data centers, 31,000 fiber route-miles of network, and metro fiber assets in 11 major markets. The transaction, which represents most of Birch’s revenue, is expected to close by the end of end of the year, subject to customary approvals and closing conditions.

Fusion's Russell Markman

Fusion’s Russell Markman

Russell Markman, Fusion’s president of business services, tells Channel Partners the acquisition will significantly increase his company’s scale and reach in North America, allowing it to offer more competitive pricing in key markets and broaden its advanced and integrated single-source cloud offerings for its channel partners. And an expanded back office will allow the company to deliver an “exceptional experience to an even larger base of customers,” he said.

“This acquisition will enable Fusion to deliver greater opportunities for its partners to expand their cloud portfolios,” he said. “In particular, we will be able to offer our channel partners expanded reach with an extensive presence in Canada, and metro fiber assets in major markets, including Atlanta, Chicago, Los Angeles, San Francisco, Denver, Dallas and Houston. With the new Fusion’s scale will come an expanded sales and support team for an even greater outreach to its partners, and an unrivaled customer experience.”

Birch partners will have a broader cloud services portfolio to sell to complement existing products and services, most notably SD-WAN, Markman said. In March, Birch announced it had shifted more money and resources to its partner program.

“With the acquisition, Fusion will be able to offer everything a business needs to migrate to the cloud and profit from its many advantages,” he said.

The acquisition will not include Birch’s legacy consumer and single-line business customers, which have lower profitability and average revenue per customer, as well as higher churn rates, according to Fusion.

Birch couldn’t be reached for comment on the acquisition.

“Time and again, Fusion has demonstrated its ability to deliver innovative and integrated customer solutions, firmly establishing the company as the ideal partner for Birch,” Vincent Oddo, Birch Equity Partners’ CEO, said in Fusion’s release. “We are confident that the combination of our two companies will create significant value for our customers and all stakeholders.”

Matthew Rosen, Fusion’s CEO, is set to lead the combined company and become chairman.

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