Birch Communications To Buy Cbeyond For About $323 Mln Cash - Update

(RTTNews) - Birch Communications, Inc., and Cbeyond, Inc. (CBEY) Monday announced that they have entered into a definitive agreement by which Birch will acquire Cbeyond in an all-cash transaction valued at about $323 million.

The transaction has been unanimously approved by boards of directors of both the companies. Cbeyond shares climbed about 39 percent in pre-market trading.

James Geiger, founder, chairman and chief executive officer of Cbeyond said, "After a thorough six-month strategic review process in which we evaluated a wide range of alternatives in addition to a sale, the Cbeyond board of directors determined that this all-cash transaction with Birch maximizes stockholder value through an attractive premium."

Atlanta-based Birch Communications provides business focused communications, cloud and managed services. Cbeyond is a technology ally to small and mid-sized businesses.

As per the deal, Cbeyond stockholders will receive between $9.97 and $10 per share in cash. According to the companies, the exact amount will be determined based on stock transactions relating to previously granted stock awards to employees, after execution of the definitive agreement.

At $9.97 per share, the purchase price represents a premium of 56.8 percent over Cbeyond's stock price on November 5, 2013, the trading date before Cbeyond announced its process to explore strategic alternatives.

The purchase price will also represent a premium of 40.8 percent over the closing price of Cbeyond's stock on Thursday April 17, 2014.

Birch noted that the transaction creates a nationwide communications, cloud and managed services provider with about $700 million in annual revenue and nearly 200,000 business customers located in all 50 states, the District of Columbia, Canada and Puerto Rico.

The transaction is expected to close within six months, subject to customary conditions, including necessary approvals from federal and state regulators and the Cbeyond stockholders.

Vincent Oddo, president and CEO of Birch stated, "The combined company will have a nationwide IP-network with a significant fiber infrastructure, an extensive data center presence in multiple markets, and a relentless focus on providing superior customer service."

CBEY closed Friday's regular trading at $7.08, up 0.14 percent. In the pre-market activity on Monday, the shares are up 39.12 percent.