By Lisa Kerner
Charlotte, N.C., June 25 - RCN Corp. agreed to acquire NEON Communications Group, Inc. for up to $5.25 per share, or about $260 million.
Both companies' boards of directors have approved the transaction, which is expected to close in the fourth quarter of 2007.
The agreement calls for the purchase price to be reduced up to $0.10 per share if NEON does not meet certain revenue targets or other financial milestones. A $6.5 million termination fee is also included in the deal.
"This is a significant strategic acquisition for RCN that scales our high-value commercial segment with another premier regional service provider in our own footprint," RCN president and chief executive officer Peter Aquino said in a company news release.
RCN will fund the purchase with a debt financing commitment of $250 million, including senior secured term loans and unsecured borrowings, in addition to existing cash reserves.
Deutsche Bank Securities, Inc. and Andrews Kurth LLP advised RCN, while the Bank Street Group LLC and Clifford Chance US LLP advised NEON.
New York-based NEON provides high-bandwidth fiber optic capacity and end-to-end telecom services to communications companies and enterprise customers in the 12-state Northeast and mid-Atlantic region.
RCN, located in Herndon, Va., provides bundled cable, high-speed internet and phone services over its own fiber-optic local network to residential customers.
| Acquirer: | RCN Corp.
|
| Target: | NEON Communications Group, Inc.
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| Transaction total: | $260 million
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| Price per share: | Up to $5.25
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| Termination fee: | $6.5 million
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| Announcement date: | June 25
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| Expected closing: | Fourth quarter of 2007
|
| Stock price for target: | Amex: NGI: $5.00 on June 22
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