Mergers & Acquisitions

Mergers & Acquisitions

March 01, 2011

Primus Acquires Arbinet Corporation

Primus Telecommunications Group, an integrated provider of telecom products and services, announced  it completed acquisition of Arbinet Corporation, a provider of wholesale telecom exchange services to carriers in an all-stock transaction.

 Arbinet (News - Alert) shareholders will receive approximately 0.5817 shares of Primus common stock for each share of Arbinet common stock that they hold. Arbinet stockholders now own approximately 25 percent of the outstanding shares of Primus common stock.

Primus is now integrating Arbinet into Primus' International Carrier Services group. The acquisition will add over $300 million in revenue, bringing Primus' consolidated annual run rate revenue to over $1 billion.

“The combination of Primus' International Carrier Services group with Arbinet's thexchange creates a unit with over $500 million in annual revenue,” said Peter D. Aquino, chairman, president and chief executive officer, in a statement. “This enhances our competitiveness and our ability to serve the diverse needs of our customers.”

The new business unit called PTGi International Carrier Services is positioned to meet customers' wholesale needs regardless of their sourcing preferences.

Primus is implementing its plan of integration which will be completed over the next 12 months. The company is expecting accretive cost synergies of approximately $3 million in 2011 and approximately $7 million in 2012.

The integration of Primus' International Carrier Services group with Arbinet will enhance competitive positioning. The combined entity will allow customers to access more global routes at competitive rates and diversify Primus' international voice and data product and services.

Primus will become a major global provider to offer customers the option either to acquire direct international connections through traditional interconnect arrangements or to manage their access needs through Arbinet's voice trading exchange.

The combined entity will improve gross margins and resulting EBITDA by eliminating operating redundancies and adding the benefits of increased scale by adding enhanced global voice and data services.

In October, 2010, Primus announced that its board of directors has named independent director Peter D. Aquino, chairman, president and chief executive officer, effective October 12, 2010, succeeding acting Chief Executive Officer John B. Spirtos.

Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Janice McDuffee

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