Atlanta, Ga. – Apr. 21, 2014 – Birch Communications, Inc., a leading provider of business focused communications, cloud and managed services based in Atlanta and Cbeyond, Inc. (Nasdaq: CBEY), the technology ally to small and mid-sized businesses also based in Atlanta, jointly announced today that they have entered into a definitive agreement under which Birch will acquire Cbeyond in an all-cash transaction valued at approximately $323 million.
Cbeyond stockholders will receive between $9.97 and $10.00 per share in cash. The exact amount will be determined based on stock transactions relating to previously granted stock awards to employees that occur after execution of the definitive agreement. At $9.97 per share, the purchase price represents a premium of 56.8% over Cbeyond’s stock price on November 5, 2013, the trading date before Cbeyond announced its process to explore strategic alternatives, and a premium of 40.8% over the closing price of Cbeyond’s stock on Thursday April 17, 2014.
Birch noted that the transaction:
- Creates a nationwide communications, cloud and managed services provider with approximately $700 million in annual revenue and approximately 200,000 business customers located in all 50 states, the District of Columbia, Canada and Puerto Rico.
- Serves customers at every stage of their business lifecycle – from an initial startup, to all sectors of the small- and medium-sized business (SMB) marketplace, to an enterprise requiring a national solution across multiple offices and data centers.
- Creates a nationwide IP-based network with approximately 10,000 fiber route miles, over 500 fiber-lit buildings, 570 collocations and 5 data centers.
“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,” said Vincent M. Oddo, president and CEO of Birch. “The combined company will have a nationwide IP-network with a significant fiber infrastructure, an extensive data center presence in multiple markets, and a relentless focus on providing superior customer service.”
James Geiger, founder, chairman of the board and chief executive officer of Cbeyond said, “After a thorough six-month strategic review process in which we evaluated a wide range of alternatives in addition to a sale, the Cbeyond board of directors determined that this all-cash transaction with Birch maximizes stockholder value through an attractive premium. 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.”
“We look forward to welcoming the Cbeyond customers and employees into the Birch family in the very near future. Providing award-winning customer service will continue to be our number-one priority as we move forward as a combined company,” said Chris Aversano, COO of Birch. “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.”
“We also look forward to integrating the Cbeyond sales organization, including management, representatives, partners, dealers and support staff into the Birch sales family,” said Christopher Ramsey, Chief Sales and Marketing Officer of Birch. “We are committed to making this a smooth and productive transition for all divisions of the sales organization.”
The Cbeyond transaction is the latest in a history of 21 acquisitions that Birch has completed in recent years. “The additional revenue scale, customer density, network reach, and product offerings will allow us to comprehensively meet the evolving, long-term needs of our business customers,” said Mr. Oddo. “We’re making this investment to serve our business customers in the best way possible for many years to come.”
The transaction has been unanimously approved by the boards of directors of both companies. The transaction is expected to close within six months, subject to customary conditions, including necessary approvals from federal and state regulators and the Cbeyond stockholders. Birch has obtained financing commitments from PNC Capital Markets LLC and Jefferies Finance LLC.
Lazard is acting as sole financial advisor and Jones Day is acting as legal advisor to Birch in the transaction.
UBS Investment Bank is acting as financial advisor and Latham & Watkins LLP is acting as legal advisor to Cbeyond in the transaction.
