(Reuters) – 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 in cash to expand its high bandwidth fiber-based communications business.
The $84 per-share deal represents a 13 percent premium to AboveNet’s closing price on Friday, the companies said in a statement.
Shares of White Plains, New York-based AboveNet were up 14 percent to $84.50 in trading before the bell. The stock closed at $74.25 on the New York Stock Exchange on Friday.
AboveNet provides high-bandwidth connectivity solutions mainly to large businesses and communication carriers. Its infrastructure is used by commercial banks, brokerage houses, insurance companies, investment banks, media companies and social networking companies, among others.
“The combination of AboveNet’s and Zayo’s assets creates a dense fiber footprint throughout North America and Europe,” AboveNet Chief Executive Bill LaPerch said in a statement.
AboveNet, whose competitors range from big telecom companies like Verizon Communications Inc and AT&T Inc to smaller regional firms, has the right to solicit other offers until April 17.
As part of the deal, Chicago-based private equity firm GTCR will make an equity investment in Zayo.
Morgan Stanley Senior Funding Inc and Barclays have committed to provide debt financing to Zayo Group LLC.
(Reporting by Supantha Mukherjee in Bangalore; Editing by Brenton Cordeiro)