Verizon to Acquire XO Communications Fiber Business
Verizon to Acquire XO Fiber Business
XO Communications has announced that Verizon Communications Inc. has agreed to purchase XO’s fiber-optic network business.
The purchase is approximately $1.8 billion. A press statement dated February 22 said that the acquisition is subject to regulatory approval from various governmental agencies and is expected to close in the first half of 2017.
The transaction would provide Verizon access to XO’s fiber-based IP and Ethernet networks, helping to better serve enterprise and wholesale customers. In addition, the acquired fiber facilities will help Verizon continue to intensify its cell network.
“This transaction will create a stronger provider of business broadband services for the customers of XO Communications,” said Chris Ancell, chief executive officer of XO Communications. Verizon will also simultaneously lease available XO wireless spectrum, with an option to buy that spectrum by year-end 2018.
Carl C. Icahn, the Chairman and Sole Shareholder of XO Holdings, said: “In 2001, I began purchasing the senior debt of XO, and the following year the company filed for bankruptcy. I then worked diligently with other stakeholders to keep XO alive, and in 2003 the company emerged from bankruptcy. The following thirteen years were a bumpy road for XO, as well as other telecoms, as we reckoned with major network overcapacity and other issues caused by overly optimistic projections and capital expenditures made by previous owners.”
Icahn said they had to inject additional capital into the company several times over those years to keep it operating. “Although this sale to Verizon does not represent a significant annualized return on our investment, we believe that in today’s environment it does represent the best achievable outcome for the company’s customers, employees and owner.”
While Verizon and XO pursue requisite regulatory approvals from governmental agencies, XO will continue to operate independently. Evercore is serving as XO’s financial adviser in connection with the transaction while Thompson Hine LLP is serving as XO’s legal adviser.
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