GTT Acquires Access Point For US$40 Million
GTT Communications’ buying spree continues. This time, the cloud networking provider has acquired Access Point, a Cary, North Carolina-based communication services provider for US$40 million.
Access Point brings with it a growing roster of strategic US enterprise clients which GTT says will deepen its presence in key verticals like retail, manufacturing, and energy, with significant upsell opportunities.
Access Point also adds complementary managed broadband, Internet, and voice capabilities to help reinforce GTT’s existing cloud networking, as well as new partner relationships. The new connections are in the indirect channel, which GTT says means will expand its presence in the overall channel marketplace.
“Access Point’s strong client relationships in key vertical markets make it a compelling strategic fit for GTT,” said Rick Calder, GTT president and CEO. “We expect a rapid integration as we work with our new clients to deliver on our purpose of connecting people across organizations, around the world and to every application in the cloud.”
The $40 million price tag spanned $35 million in cash $5 million in stock. Citizens Capital Markets advised Access Point on the deal.
GTT: A Merger and Acquisition Expert?
GTT has been active on the M&A (merger and acquisition) front. In March, the company acquired Accelerated Connections, expanding its reach into the Canadian market. That deal came just weeks after GTT acquired Interoute, Europe’s largest independent fiber network and cloud networking platform provider.
GTT’s strategy revolves around buying up regional providers. The company also bought Amsterdam-based Custom Connect while last year, the company bought managed data and voice services provider Transbeam for $28 million in cash.
GTT’s biggest deal was the acquisition of Hibernia Networks in early 2017, which at the time Calder called a “funnel” for more than 50 possible M&A deals.
GTT: Revenue and Earnings Growth?
Amid all that M&A activity, GTT’s revenues were $326.8 million for the company’s 2Q 2018 — up nearly 72 percent from 2Q 2017. However, pro forma (for constant currency and accounting for Interoute and Global Capacity’s historical results) revenues grew only 1.2 percent, SeekingAlpha notes. Also, the company shifted from a small quarterly profit in 2Q 2017 to a $136.3 million net loss for 2Q 2018.
During the August 2018 earnings call, Calder compared the company to that of the recent CenturyLink-Level 3 merger. “We’ve always thought Level 3 in CenturyLink is one of the sort of closer comparables to our business in terms of selling cloud networking services to large multinationals,” he noted.
Additional insights from Joe Panettieri.