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GTT Grabs Hibernia Networks for $590M

Carol Wilson
11/9/2016
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GTT Communications, a company built through acquisition, today announced one of its biggest to date, the $590 million acquisition of Hibernia Networks, a global network operator known for its subsea fiber assets including Hibernia Express, its low latency trans-Atlantic cable system.

The deal is just the latest in a fall of M&A activity. It is expected to close in the second quarter of 2017, consists of $515 million in cash and 3.3 million shares of GTT common stock worth $75 million. GTT Communications Inc. acquired seven service providers on the way to building a top five global ISP network, and Hibernia Networks represents the biggest fish it's landed to date, as the company seeks to compete for multinational cloud connection business. (See GTT Applauds AT&T's New Distraction and GTT Ready to Bust Out.)

Hibernia operates fiber optic networks in 100 markets and 25 companies globally, mostly in the US, EMEA and landing sites in Asia-Pacific. It also operates its own video transport network and Hibernia Express, a 53 Tbit/s low latency transatlantic cable network launched a little over a year ago. (See All Aboard: Hibernia Express Cable Completed and Hibernia Offers Protected Wavelengths on Undersea Routes.)

"This clearly adds incredible breadth and depth to our existing global Tier 1 IP network," GTT CEO Rick Calder tells Light Reading in an interview. He contrasts GTT's acquisition with other recent M&A activity in the telecom space: "In this case both companies are growing, which is very different from other recent acquisitions," he says.


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Adding Hibernia's video transport network to the mix is particularly interesting at a time when video represents such a significant segment of IP traffic, Calder notes. "We have an interesting set of media and entertainment clients already and this is a chance to grow that base," he says.

According to the GTT announcement, the company expects to achieve "a post-synergy multiple of seven times Adjusted EBITDA or better on a pro forma basis."

— Carol Wilson, Editor-at-Large, Light Reading

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Ray@LR
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[email protected],
User Rank: Blogger
1/10/2017 | 3:44:12 AM
Deal closed already!
Hibernia sent out a statement Jan 10 to say the deal was completed, so that happened earlier than expected.
rauf.sulya
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rauf.sulya,
User Rank: Lightning
11/10/2016 | 12:59:07 AM
Good news for both to cover end to portfolio
This is very much surprising news. However, GTT is known for mainly IP services & they have strong portfolio in IP based services like Internet Services , EtherCloud services, Managed Services, & Voice & Unified communications. As per my knowledge , for subsea global capacities they are leasing from other service providers.

Hibernia, on other side has very strong subsea routes & provider of global capacity telecommunication services. Off course, any IP transit/ IP service providers required global capacities
for better connectivity. Hibernia has transatlantic cable system with very low latency.

Looks like more or less merger and acquisitions like Level3 + Century Link. Good Luck for both .
Carol Wilson
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Carol Wilson,
User Rank: Blogger
11/9/2016 | 10:10:46 AM
Re: Will growth + growth = more growth?
I think the growth to which he refers is in selling cloud connectivity services to multi-nationals - from GTT's perspective, adding Hibernia's global network and subsea operations opens up a lot of new potential sales opportunities for the set of managed services it has developed. 

You are right in citing the challenges to doing that, and any integration has the potential of slowing down both parties. But you have to give GTT some credit for being able to rapidly integrate acquisitions, squeezing out the overlapping facilities and capitalizing on the new reach. 
Ray@LR
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[email protected],
User Rank: Blogger
11/9/2016 | 9:59:28 AM
Will growth + growth = more growth?
GTT CEO Rick Calder tells Light Reading -- "...both companies are growing, which is very different from other recent acquisitions."

That's true compared to many of the shotgun weddings we've seen.

But this also sounds like Calder is suggesting that this will simply result in, at the very least, aggregated growth, if not accelerated growth.

But I don't think it necessarily works like that -- unless there is 100% buy-in from all members of both cmpanies and all of their customers and partners, cracks will appear. If Calder and his team and new colleagues are on top of that then it should resuklt in accelerated growth, but so often it doesn't...
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