“Acquisition Is Major Milestone in Fusion’s Strategy To Become Leading Single-source Cloud Services Provider”
Fusion (NasdaqCM: FSNN), a leading cloud services provider, announced recently that it has entered into a definitive agreement to acquire the Cloud and Business Services customers, operations and infrastructure of privately-held Birch Communications, which represents the majority of Birch’s current revenues. The transaction is expected to close by the end of 2017, subject to customary approvals and closing conditions. Birch shareholders will exchange their equity position in Birch’s Cloud and Business Services business, valued at approximately $280 million, for common equity of the combined company. The All-stock transaction in which Birch shareholders will receive approximately 73 million common shares of Fusion valued at $3.85 per share, was reported to be a premium of more than 200% versus the prior trading day’s closing price, representing approximately 5x the pro forma adjusted EBITDA of Birch’s Cloud and Business Services business including anticipated synergies.
The combination is expected to create one of the largest cloud services providers in North America, with more than 150,000 business customers and a 100% Internet Protocol-based network, including 30 data centers, 31,000 fiber route-miles of network, and metro fiber assets in 11 major markets. The combined customer base is expected to demonstrate strong fundamentals, with monthly recurring revenue comprising approximately 87% of total revenue. In addition, the combined company will have significant opportunities for growth by cross-selling and upselling to existing customers with a comprehensive suite of cloud and business services.
Matthew Rosen, Fusion’s Chief Executive Officer stated, “This acquisition is a major milestone in Fusion’s targeted and disruptive strategy of becoming the leading single-source cloud services provider to business and enterprise customers. Customers increasingly demand an end-to-end experience that is reliable as well as efficient and innovative. Fusion is well positioned to provide these services having been first-to-market to pursue this strategy, and can now do so with increased scale and resources. This combination will immediately move Fusion into the top tier of cloud services providers and establishes a robust platform from which to pursue aggressive value enhancing initiatives through both organic growth and strategic acquisitions. By leveraging the significantly larger scale of Fusion following the acquisition, the company will gain new efficiencies and greater cash flows, which we believe will drive shareholder value. We also expect that the new Fusion will gain broader awareness among investors and analysts, along with expanded access to the capital markets, which will further support our compelling growth strategy.”