TORONTO and WINNIPEG – MTS has sold off its Allstream division to Colorado-based communications infrastructure service provider Zayo Group Holdings Inc. for $465 million in cash, the company announced early Monday.
The deal comes some six months after MTS Allstream completed a strategic review that determined that the Toronto-based Allstream division was not “integral or strategic to MTS's future”.
After closing costs, MTS said that it expects to realize net proceeds of approximately $425 million from the sale. The company said that the sale process was thorough, with a large number of potential buyers resulting in multiple bids for consideration.
"We believe this transaction maximizes the value of a stabilized and renewed Allstream, is in the best interests of the Company, and positions both MTS and Allstream for long term success in a competitive telecom marketplace", said president and CEO Jay Forbes, in the release. "The acquisition by Zayo represents a new beginning for Allstream and a significant new evolution in the competitive landscape of Canadian telecoms."
Zayo provides communications infrastructure services, including fibre and bandwidth connectivity, colocation and cloud services to customers including wireless and wireline carriers, media and content companies, finance, healthcare and other large enterprises worldwide. Allstream’s national high-performance fibre optic network will be added to Zayo’s 87,000-mile network network in the U.S. and Europe, which includes extensive metro connectivity to thousands of buildings and data centres.
The transaction has been approved by the MTS Board of Directors and is expected to close in the first quarter of 2016, pending regulatory approvals that includes national security approval and Competition Bureau approval.
