Birch Communications, Inc., a provider of business focused communications, cloud, and managed services announced its definitive agreement to acquire Cbeyond, Inc. (NASDAQ:CBEY), an integrated communications services provider for approximately $323 million in cash.
The stock price of CBeyond, Inc. (NASDAQ:CBEY) surged more than 38% to $9.83 per share following the announcement of the deal.
Amid the turmoil in the public markets and the staggering macroeconomic environment, it should come as no surprise that the private markets are also struggling. In fact, there are some important links between private equity and the current economic environment. A closer look at PE reveals that the industry often serves as a leading indicator Read More
Details of the Birch Communications – Cbeyond transaction
According to the statement of both companies, the shareholders of Cbeyond, Inc. (NASDAQ:CBEY) will receive between $9.97 and $10.00 per share. The companies said the exact amount of the acquisition will be determined based on stock transactions relating to previously granted stock awards to employees after executing the definitive agreement.
The acquisition price at $9.97 per share will represent a 56.8% premium to the price of the shares of CBeyond, Inc. (NASDAQ:CBEY) on November 5, 2013. That was the time when CBeyond announced its intention to explore strategic alternatives. The amount also represents a 40.8% premium of the closing price of the stock last Thursday, April 17, 2014.
Birch Communications, Inc. estimated that the transaction will create a communications, cloud and managed services provider that will generate approximately $700 million in annual revenue, and around 200,000 business customers across the United States including Canada, District of Columbia and Puerto Rico.
It will also create a nationwide IP-based network with approximately 10,000 fiber route miles, more than 500 fiber-lit buildings, 570 collocations and 5 data centers. It will also serve all types of customers from initial startup, small- and medium-sized business (SMB), enterprises that need national solutions across multiple offices and data centers.
In a statement, Vindent Oddo, president and CEO of Birch Communications, Inc. said, “This transaction will create a nationwide communications and technology services powerhouse and significantly advances our strategy to drive top-line revenue growth by enhancing the premier communications, cloud and managed services that are available to our business customers.”
James Geiger, founder, chairman of CBeyond, Inc. (NASDAQ:CBEY) said the board of directors of the company believed that the transaction maximizes value for shareholders through an attractive premium after evaluating a wide range of alternatives.
“We have been strengthening the Cbeyond franchise with our 2.0 transformation; the wider reach with Birch enables the combined companies to increase service levels with a broad array of products to a larger number of customers,” added Geiger.
On the other hand, Chris Aversano, COO of Birch Communications, Inc. said, “Having successfully completed more than 20 acquisitions, we are confident in our ability to execute a fast and seamless integration. We’ve already started on our integration planning and, as in prior transactions; we expect to begin implementation of those plans upon the closing.”
Meanwhile, a law firm, Rigrodsky & Long, P.A. announced that it is investigating potential legal claims against the board of directors of of Cbeyond, Inc. (NASDAQ GS: CBEY) for possible violation of fiduciary duties and laws related to its agreement to sell itself to Birch Communications, Inc.