The wave of consolidation in the metro fiber space took another important turn this morning as Northeastern fiber operator Lightower Fiber Networks has agreed to purchase New York City-based Lexent Metro Connect. Lexent sells dark fiber solutions in both Manhattan and across the river in New Jersey, and has been a key player in the region when it comes to the low latency frenzy in the financial vertical. No financial details were provided, as both companies are privately held. That leaves us guessing for now as to what sort of EV/EBITDA multiple Lexent might have gone for. Lightower is backed by private equity M/C Venture Partners, Pamlico Capital, and Ridgemont Equity Partners.
The purchase will add 150 route miles and connectivity into 200 buildings to Lightower’s current tally of 4600 fiber route miles and 2000 on-net buildings. Lightower’s coverage prior to this in New York tended to be stronger in the northern suburbs and to the east on Long Island. Lexent’s depth in the critical Manhattan markets those ultra-low latency routes to key New Jersey facilities are therefore very complementary to Lightower’s network. Lexent is also one of only a select few providers authorized to build new dark fiber and conduit in New York City. Lightower will likely add lit services upon Lexent’s dark fiber assets, and with deeper pockets backing the combined company they will surely seek to ratchet up growth.
Lightower was itself assembled from several pieces: National Grid, DataNet Communications, and Keyspan Communications. Alongside the company’s recent purchase of Veroxity, it is clear that they are seeking greater depth across their current footprint, aiming to be the pre-eminent fiber provider in the Northeast. The other major freestanding metro fiber providers in the area are Sidera Networks (formerly RCN Metro), and Fibertech. All three have been involved in this wave of consolidation, and there might yet be more to come.
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Categories: Low Latency · Mergers and Acquisitions · Metro fiber
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With fibertech off the M&A market, do you see nstar comm or Sidera sales in the near future?
nstar – ABVT?
Sidera – no I don’t. NSTAR? That one seems likely, and I agree with Anonymous that Abovenet would be a likely candidate to buy it. Though Sidera itself might fancy NSTAR…
My informed opinion … this was a 15x EBITDA deal …
Wow, 15x EBITDA would be quite a premium. But then we are talking NYC here…
It was an aggressive auction to the end.
Many strategics that showed interest were out early … some still like to low ball and others can’t explain why they can or should by a business higher than there current multiple. All I can say, now that a strategic lost, go get the cash and build it — good luck.
These are all make v. buy deals/decisions … time to market opportunity costs, etc … and overall well run companies being acquired, the redundant junk was sold off years ago.
On PAET – could have they bought backbone fiber across the entire Cavalier network cheaper than taking on $460mm in new debt? Cavalier comes with a triple CATV play — something PAET has no experience running and, it is no industry secret, was for sale for a long time with no takers!!!!
Is this a PE trend or just a PE Lemming bubble starting to form?