Zayo Group to take AboveNet private for $2.2 billion

WHITE PLAINS, N.Y., Mon Mar 19, 2012 – Privately held Zayo Group LLC agreed to buy rival AboveNet Inc., a provider of broadband connections to big companies and carriers, for about $2.2 billion to tap into the galloping demand for fast data services.

The $84 per-share offer represents a 13 percent premium to AboveNet’s closing price on Friday on the New York Stock Exchange.

Shares of White Plains, New York-based AboveNet rose 14 percent to $84.45, indicating investors expected a better offer.

Analyst Donna Jaegers of brokerage D.A. Davidson & Co said possible bids might come from strategic players, such as TW Telecom Inc., Comcast Corp. and CenturyLink Inc.

AboveNet, whose competitors range from big telecom companies like Verizon Communications Inc. and AT&T Inc. to smaller regional firms, has until April 17 to solicit better offers.

The ‘go-shop’ period can be extended to May 2 under certain circumstances, and Zayo has certain rights to match any superior proposal, the companies said in a statement.

“(Zayo CEO Dan Caruso) would probably have a little more dry powder that he could come back with a sweeter deal,” Jaegers said.

AboveNet provides broadband connectivity mainly to large businesses and carriers, including banks, brokerage houses, insurance companies, and media companies.

“As far as looking at prime metro fiber assets, AboveNet is head and shoulders above any of the little companies that (Zayo) can look at,” analyst Jaegers said.

Louisville, Colorado-based Zayo has a fiber network of more than 44,000 route miles and nearly 2 million fiber miles.

The combination will bulk up the combined company’s footprint throughout North America and Europe, AboveNet Chief Executive Bill LaPerch said.