Of all the deals I’ve ever thought the European network and cloud provider Colt might be involved in, this one never came up. Colt announced this morning that it plans to acquire Tokyo-based KVH for €130.3M.
KVH operates network and data centers and offers IT services in key Asian cities like Tokyo, Seoul, Hong Kong, and Singapore. Like Colt, it has a substantial presence in the financial vertical, and has optimized its global routes between its Asian hubs and the key market sites in New York and Chicago for ultra low latency and all that. They recently upgraded their metro backhaul network to 100G with gear from Cyan.
The thread binding Colt and KVH is of course their common owner, Fidelity. What this really represents, therefore, is Fidelity’s intention to take its network and cloud infrastructure properties from a focus on specific regions of the globe to the international stage. And therefore, the question becomes ‘What other international assets might fit Fidelity’s new international vision for Colt?’
I haven’t thought too hard about Colt’s possible targets beyond Europe. But now that I do, I’m wondering if either of India’s rival global network assets, Tata Communications or Global Cloud Xchange, might fit the bill. Pacnet might be another way for them to add Asian scale and beef up the underlying assets. Or perhaps the next step should be something in the Americas…
With European assets at attractive prices, I’ve a bit surprised that Colt’s name hasn’t come up as often as it might have when it comes to M&A. In fact, the likelihood that Colt and its pan-European network reach and on-net depth would be on the other side of the consolidation table always seemed bigger to me, and I’ve speculated in the past that the company would be a really good fit for Level 3. This deal doesn’t make that eventuality less likely, except in the short term since both sides will obviously be distracted.
Colt expects to derive annual cost synergies of €8.5M from the integration.
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Categories: Datacenter · Fiber Networks · Low Latency · Mergers and Acquisitions
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Not that you don’t have a million conversations but you and i have talked about this potential I believe.
For Colt, I believe it makes plenty of sense and the price looks like a related party discount which should please shareholders. This deal was well telegraphed as an asian expansion on their 2q call but something closing in December is a bit quicker than expected.
Colt is a public company. KVH is a private company. Fidelity is the parent of both.
For years, Fidelity has been pissing away money on KVH. KVH is in serious decline and has been for a decade. Over the past 4 years, Fidelity sent a message to KVH that they weren’t going to give them anymore money. They see KVH as a money pit.
The reality is that Fidelity pushed Colt to acquire KVH because it allowed them to take some cash from Colt shareholders and still maintain control of the company indirectly through Colt.
The KVH acquisition represents nearly ZERO positive value for Colt shareholders. Fidelity pulled a shell game on you all with this one.
Colt just bought a dog asian telecom that had such a bad 2nd half due to churn that they have zero chance of making their numbers this year. Fidelity and Colt will try to spin this as a success story while they trade Colt shareholder money for a failing private Japanese telecom. Did Colt shareholder ask about the financial condition of KVH before this went through? roflol