GTT sells Infrastructure Division for $2.15 Billion (Hibernia, KPN, Interoute)

GTT has announced that it has signed an agreement to sell its Infrastructure division to I Squared Capital (ISQ) for $2.15 billion. GTT signaled plans to sell the infrastructure business last fall when it hired Credit Suisse Group and Goldman Sachs as financial advisors.

It's expected that ISQ will att the GTT acquisition to HGC, which it acquired in 2017 for $1.9 billion.

The "Infrastructure Division" includes GTT’s European and North American sub-sea and trans-Atlantic fiber network and data center infrastructure. This includes Hibernia (acquired in 2017 for $590 million), KPN International, and Interoute (acquired in 2018 for $2.3 billion).

A 103,000 route kilometer fiber network with over 400 points of presence, spanning 31 metro areas and interconnecting 103 cities across Europe and North America.
Three transatlantic subsea cables, including GTT Express, the lowest latency route between Europe and North America.
Fourteen Tier 3 data centers and over 100 colocation facilities.
Offering a full suite of telecom and data infrastructure solutions to marquee clients.

GTT retains its cloud networking services over its global Tier 1 IP network, which includes traditional and software-based networking, security and internet services.

This effectively brings GTT full circle to what it was before the Hibernia and Interoute acquisitions.

The acquisition is expected to close in the first half of 2021.

GTT Press Release on Oct 16, 2020:

MCLEAN, Va.(GLOBE NEWSWIRE) -- GTT Communications, Inc. (NYSE: GTT), a leading global cloud networking provider to multinational clients, announced today that the company has signed a definitive purchase agreement to sell its infrastructure division to I Squared Capital, an independent global infrastructure investment firm, for $2.15 billion.1 The infrastructure division consists of GTT’s business and activities of providing Pan-European, North American, sub-sea and trans-Atlantic fiber network and data center infrastructure services to customers.

GTT provides a comprehensive portfolio of cloud networking services over its global Tier 1 IP network that includes traditional and software-defined wide area networking, global SIP trunking, advanced solutions, security and internet services.

“The divestment of the highly differentiated infrastructure division assets will ensure greater focus on network investment and development of high-speed infrastructure services under the more specialized ownership of this experienced investor,” commented Ernie Ortega, GTT CRO and interim CEO. “The deal enables GTT to reinforce its capex light business model as well as its cloud networking focus and will benefit both enterprise and infrastructure clients alike.”

Gautam Bhandari, managing partner at I Squared Capital stated, “Now more than ever, digital infrastructure is an essential asset class as societies across the globe rely heavily on high-speed digital bandwidth. This acquisition builds upon I Squared Capital’s overarching global digital infrastructure strategy and experience with complex carve-outs to expand the reach of our platforms across Asia, Europe and North America.”

The infrastructure division sale consists of selected network and data center assets accumulated from several GTT acquisitions, including Interoute, Hibernia, and KPN International, that comprise:

A 103,000 route kilometer fiber network with over 400 points of presence, spanning 31 metro areas and interconnecting 103 cities across Europe and North America.
Three transatlantic subsea cables, including GTT Express, the lowest latency route between Europe and North America.
Fourteen Tier 3 data centers and over 100 colocation facilities.
Offering a full suite of telecom and data infrastructure solutions to marquee clients.

The acquisition is expected to close, subject to satisfying all required regulatory approvals and contingencies included in the agreement, during the first half of 2021.

Credit Suisse and Goldman Sachs are the financial advisors and Goodwin Proctor LLP is acting as legal advisor to GTT on this transaction. Morgan Stanley acted as financial advisor and Rothschild as debt advisor to I Squared Capital, with Solon acting as commercial and technical advisor, KPMG as tax and accounting advisor, Linklaters as legal advisor and Latham & Watkins as borrower’s counsel.

1 The total consideration includes an upfront cash payment of $2.02 billion at closing and total deferred payments of up to $130 million based on certain financial results.