Verizon to Acquire XO Communications’ Fiber Business
HERNDON, Va. – February 22, 2016 – XO Communications (XO) announced today that Verizon Communications Inc. (NYSE, NASDAQ: VZ) has signed an agreement to purchase XO’s fiber-optic network business for approximately $1.8 billion. 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 densify its cell network.
Separately, Verizon will also simultaneously lease available XO wireless spectrum, with an option to buy that spectrum by year-end 2018.
“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.
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. In fact, we 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 advisor in connection with the transaction. Thompson Hine LLP is serving as XO’s legal advisor in connection with the transaction.
About XO Communications
XO Communications provides the technology that helps business and wholesale customers compete in a hyper-connected economy. In the U.S., XO owns and operates one of the largest IP and Ethernet networks that customers rely on for private data networking, cloud connectivity, unified communications and voice, Internet access, and managed services. To learn more about XO Communications, visit www.xo.com or our blog. XO Communications is also on Twitter and LinkedIn.