FiberNet Telecom Group Inc., a New York-based wholesale carrier, on Monday announced an agreement to acquire Con Edison Communications for approximately $37 million in cash.
FiberNet said the deal would more than double its revenue, which was $26.4 million through the first nine months of the year. Combined network assets will include nearly 80,000 fiber miles and access to 190 buildings in New York and Los Angeles, including 18 central offices, 22 carrier hotels and 150 commercial buildings.
The boards of directors of FiberNet and Con Edison have approved the agreement, but the acquisition is pending regulatory approval from federal, state and municipal authorities.
The new management team will comprise executives from both companies. Michael Liss, who has served as CEO of FiberNet for the last five years, will remain chairman of the company after the acquisition closes while FiberNet CFO Jon LeLuca will become president and CEO of the combined company. Peter Rust, president and CEO of Con Edison Communications, will lead the business’s focus on the enterprise market as the president of enterprise services.
FiberNet and Con Edison Communications, a subsidiary of New York utility Consolidated Edison Inc., provide managed network services to communications companies and other businesses.
"This acquisition expands and diversifies our business into the enterprise arena,” Liss said in a press release. “The complementary aspects of our capabilities will allow us to benefit from significant synergies and cost savings, improving our profitability and marketplace strength."
Based on current results, the combined company will generate about 63 percent of revenue through telecommunications carriers, with the remaining 37 percent coming from enterprise customers. During the first nine months of 2004, FiberNet posted $23.7 million in revenues, excluding a non-recurring arbitration award. Con Edison Communications recorded $23.9 million during the same period, according to FiberNet.
