OCTOBER 11, 2006 -- Global Crossing (search Global Crossing) today announced that its subsidiary, GC Acquisitions UK Limited, has formally acquired Fibernet Group Plc (search Fibernet). GC Acquisitions UK will pay Fibernet shareholders 78 pence (approximately $1.48) per share, for a total equity value of approximately $94.6 million.
In response to its offer to Fibernet shareholders on September 14, 2006, GC Acquisitions UK has received acceptances as to 91% of Fibernet's issued shares. Having declared the offer unconditional in all respects and having thereby acquired and taken control of Fibernet, GC Acquisitions UK has ensured its ability to acquire all of the remaining shares through the UK's compulsory share acquisition process.
"The addition of Fibernet makes us an even stronger competitor, both in the UK and globally, contributing positively to Global Crossing's leadership position as a next-generation communications provider," notes John Legere, chief executive officer of Global Crossing. "This acquisition will further accelerate the performance of our 'invest and grow' segment with the addition of Fibernet's valuable enterprise and Internet service provider customers and the opportunity to serve their future requirements with Global Crossing's broader portfolio of innovative IP solutions."
Fibernet's roster of enterprise and carrier customers in the financial, insurance, and retail segments complements Global Crossing's market position in the UK government and rail sectors. These customers, Fibernet's customer-focused team, and its innovative access capabilities are a superb match to Global Crossing's portfolio of advanced IP offerings, say Global Crossing representatives. The carriers have had a long-standing commercial relationship, which is expected to facilitate a smooth transition for customers of both companies.
Global Crossing plans to rapidly integrate Fibernet's business into its UK operations and expects that Fibernet will add more than $80 million in annual revenue after elimination of $10 million of inter-company revenue. After completion of integration and achievement of operating cost reductions, Fibernet is expected to add more than $30 million in annual Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). Additionally, Global Crossing expects synergies in the form of reduced capital expenditures of as much as $10 million. Operating and capital expense synergies will be achieved by eliminating duplicative operating and administrative staff and costs; public company expenses; and duplicative leased operating and administrative facilities. Integration is expected to take 12 to 18 months and to have a one-time cost of up to $10 million.
"Acquiring Fibernet strengthens Global Crossing's financials and moves us further past the Adjusted EBITDA breakeven point," Legere adds. "Our participation in industry consolidation demonstrates that we're successfully executing our strategy to be an industry leader in the provisioning of IP services to global enterprises through both organic and inorganic growth."
Hawkpoint Partners Limited was Global Crossing's sole financial advisor, and Latham and Watkins provided legal counsel on the transaction.
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