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:
- AboveNet Joins Allied Fiber
- CxO Downloads: AboveNet's Rajiv Datta
- Q&A: AboveNet Communications
- AboveNet Deploys Ciena
- Ethernet Europe: AboveNet Eyes 100G First