GTT ‘nears $2bn deal’ for Interoute and Hibernia, says report

09 September 2020 | Alan Burkitt-Gray

A consortium of three bidders is in “advanced talks” to buy the former Interoute and possibly also Hibernia Networks for more than US$2 billion, according to reports last night.

The Bloomberg news agency reported that the potential buyers of GTT Communications’ Apollo infrastructure operations are Australian bank Macquarie, pension fund AustralianSuper and UK investor 3i.

The agency reported: “The consortium is in talks to buy the assets for more than $2 billion, said one of the people, who asked to not be identified because the matter isn’t public.”

This is more than GTT was expecting. Only last week one source told Capacity GTT had a bid of $800 million. Another said: “Current shareholders will be upset if the price is below $1.9 billion.”

GTT bought Hibernia and Interoute in separate deals in 2017 and 2018 respectively, for a total of almost $2.9 billion. If Bloomberg’s report is accurate, the company, listed on the New York Stock Exchange (NYSE) will have lost around $900 million on the infrastructure operation.

The Bloomberg report did not mention Hibernia, and Capacity has not been able to establish whether the Macquarie consortium is interested in that. One industry observer who has a reason to know said: “When we looked at it, Hibernia was worthless. They were losing money. The cost of running it was more than the revenue.” This source, speaking on the basis of anonymity, said Hibernia was worth less than $100 million, far less than the $590 million GTT spent. 

GTT’s shares went up sharply on the report. Last Thursday shares were trading at $5.36, valuing the company at just $315 million. Yesterday they opened at $5.45 and then went up to a high of $6.96 before settling to $6.15, giving GTT a market cap of almost $362 million. GTT has debts of $3.6 billion.

Macquarie has been named as a bidder for shares in Italy’s Open Fiber, which is likely to be merged into a single national fibre network. In May, the Financial Times reported that Macquarie was working with an unnamed sovereign wealth fund to take an investment in Openreach, BT’s last-mile fibre and copper company.

In March Macquarie beat Canadian investor Brookfield to buy Cincinnati Bell in a deal valuing the operator at $3.05 billion.

London Stock Exchange-listed 3i bought 50% of Tampnet, which provides telecoms to oil fields, in March 2019 alongside Danish pension fund ATP.