GTT Communications will sell its fiber and data center infrastructure to I Squared Capital for $2.15bn.
The sale comes as GTT shifts its focus to its cloud business, and seeks to reduce its debt.
Selling off the silverware
The Miami-based I Squared Capital bought the company’s assets for $2.02bn in cash upfront and a $130m deferred payment. When the deal is closed in 2021, I Squared will take over GTT's three transatlantic submarine cables, 14 data centers, and its terrestrial pan-European cables.
The company owns GTT Express, the fastest transatlantic cable currently available, and the US-Europe GTT North and GTT South cables. Along with GTT's 'major' data centers, it also owns more than 50 colocation centers and over 250 amplifier sites across Europe and North America.
Credit Suisse and Goldman Sachs are the financial advisors and Goodwin Proctor LLP acted as a legal advisor to GTT on this transaction. Morgan Stanley acted as a financial advisor and Rothschild as a debt advisor to I Squared Capital.
The Macquarie Group, 3i Group Plc, and AustralianSuper all competed for GTT’s assets and were in talks with GTT but lost out to I Squared. The acquisition is subject to regulatory approvals.
Ernie Ortega, GTT CRO, and interim CEO said: “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.
"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.”
A CapEx light business model is an asset-light model where a business owns relatively few capital assets compared to the value of its operations.
“Now more than ever, digital infrastructure is an essential asset class as societies across the globe rely heavily on high-speed digital bandwidth," Gautam Bhandari, managing partner at I Squared Capital, said.
"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.”