(WEB HOST INDUSTRY REVIEW) — Telecom provider FiberNet Telecom Group (www.fxtg.com) announced on Thursday it will continue on with its May agreement to be sold to Zayo Group (www.zayo.com) for $86 million, after RCN Corp. (www.rcn.com) withdrew its higher bid.
Bandwidth, voice and managed services provider Zayo will purchase FiberNet for $11.45 a share.
In May the WHIR reported that Zayo entered talks to purchase the telecom. However, the agreement allowed FiberNet to continue to seek higher offers.
The company revealed it received a $93.9 million offer from RCN, but the telecommunications firm has since withdrawn the $12.50 a share offer.
Closing Wednesday at $5.86 a share, RCN has lost nearly 60 percent of its value in the past 10 months.
FiberNet’s shares closed Wednesday at $12.40 and jumped as high as $13.33 last month over the possibility that the company would fetch a higher-priced offer.
Some of the telecom’s investors have criticized the deal as undervaluing the company. Carson Capital, which owns 10 percent of the company’s stock, wrote a letter to FiberNet’s board saying that it thinks the company is worth over $14.50 per share.
Another shareholder took a more drastic approach, filing a lawsuit against FiberNet in June.
The lawsuit alleged that the deal is unfair to shareholders and that the company’s board did not engage in a fair process to assure the highest possible purchase price, did not properly value the company and did not disclose material facts involving the proposed deal.
FiberNet’s shareholders still need to approve the acquisition, which the company says it hopes to complete this quarter.
The company, which celebrates its 10th anniversary this year, owns and operates integrated colocation facilities and diverse transport routes in New York/New Jersey, Los Angeles, Chicago and Miami.
