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Is AboveNet for Sale?

Jeff Baumgartner
5/24/2011

AboveNet Inc. (NYSE: ABVT) shares popped as high as 13 percent today amid a report that the company, which provides high-bandwidth services to large enterprises and network operators, is looking for a buyer.

DealReporter said AboveNet has retained JPMorgan to find a buyer, and identified Level 3 Communications Inc. (NYSE: LVLT), tw telecom inc. (Nasdaq: TWTC) and several private equity firms, including Abry Partners LLC and Oak Hill Capital Partners, among those that might be interested.

Among that group, Level 3 has already been deal-happy of late, striking a $1.9 billion deal to acquire Global Crossing (Nasdaq: GLBC) and help it expand its global reach. (See GC Could Boost Level 3's Global Ambitions.)

The same type of incentive could be in play if Level 3 shoots for AboveNet, which operates more than 2.3 million fiber miles linked to more than 2,600 buildings. It already serves several major U.S. markets, but has also expanded into London, Paris, Amsterdam and Frankfurt.

Update: Heavy Reading Senior Analyst Stan "The Etherman" Hubbard doesn't see Level 3 as a likely buyer, given that it's likely got its hands full with Global Crossing.

However, a "combination of two innovative and profitable operators like tw telecom and AboveNet would be very impressive," he notes via email.

"AboveNet is one of the most innovative providers of Ethernet and wavelength services and would definitely be on my shopping list if I was a service provider looking to expand network footprint in major metro markets like New York City and to strengthen relationships with financial customers," he writes.

AboveNet posted first-quarter net income of $14.5 million on revenues of $114.4 million, up 17.7 percent year-on-year. It ended the period with $70.6 million in cash and investments. The company's shares rose $6.08 (10%) to $69.49 in late trading Tuesday.

Read (and see) more about AboveNet:

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Stevery
Stevery
12/5/2012 | 5:04:27 PM
re: Is AboveNet for Sale?


AboveNet Inc. (NYSE: ABVT) shares popped as high as 13 percent today amid a report that the company, which provides high-bandwidth services to large enterprises and network operators, is looking for a buyer.


Nobody sells their used car because it runs too well.

rjmcmahon
rjmcmahon
12/5/2012 | 5:04:26 PM
re: Is AboveNet for Sale?


Ok, 2.6M miles of fiber / 2.6K buidings gives ~884 miles per each building.


$114M Gross / 2.6M miles is ~$50 gross per mile per year


Net income of 14.5/2.6 is $5.57 per mile per year


or $0.015 per mile per day.


Ouch!

macster
macster
12/5/2012 | 5:04:25 PM
re: Is AboveNet for Sale?
"Nobody sells their used car because it runs too well."

LOL! This brought a smile to my face. Thanks!
Pete Baldwin
Pete Baldwin
12/5/2012 | 5:04:23 PM
re: Is AboveNet for Sale?


Yes, that's a good one.


But it still makes sense that the stock went up.

kess
kess
12/5/2012 | 4:58:12 PM
re: Is AboveNet for Sale?


True no one sells their car when it is running well. I wounder all these "reported" figures of great revenue and profit, have accounts been signed off their auditors or is this just creative accounting. 


 

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