Thomas Seal and Gillian Tan (Bloomberg) -- GTT Communications Inc. agreed to sell its fiber and data center infrastructure division to I Squared Capital for $2.15 billion, as the telecom carrier focuses on its cloud networking business.
The Miami-based private equity firm will acquire GTT’s Europe and North America sub-sea fiber network, data center infrastructure and services for $2.02 billion in cash upfront as well as a $130 million deferred payment when the company meets certain milestones, GTT said in a statement on Friday.
I Squared beat out rival infrastructure investors, including Macquarie Group Ltd., 3i Group Plc and AustralianSuper, which had been in advanced talks to buy the assets at the same price, people familiar with the matter said previously. Digital infrastructure assets like optical fiber have been the focus of a flurry of deals as investors favor their reliable, long-term returns. The coronavirus pandemic has fueled demand as more people work, shop and socialize online.
”This network provides a good springboard for us to grow in Europe and North America,” said Gautam Bhandari, managing partner at I Squared, in an interview. He said the firm will seek out tuck-in acquisitions.
For GTT, the sale will create a “capex-light business model,” interim Chief Executive Officer Ernie Ortega said. The deal is expected to close in the first half of 2021.
GTT shares jumped as much as 31% in New York on Friday, the biggest intraday gain since August 2019. The stock was up 17% to $5.84 at 10:03 a.m. GTT bonds maturing in 2024 jumped on Friday to 60.5 cents on the dollar, up from 51 cents, according to Trace bond pricing data.
Credit Suisse Group AG and Goldman Sachs Group Inc. were financial advisers to McLean, Virginia-based GTT, while Morgan Stanley was the financial adviser and Rothschild & Co. was the debt adviser for I Squared.