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Atlanta-based Cbeyond, once a fast-growing technology success story, has agreed to be bought by another local technology business for $323 million in cash. The deal follows three years of hard times for Cbeyond.
Privately held Birch Communications announced Monday its planned purchase, the firm’s 21st since 2006. Shareholders of publicly traded Cbeyond would have to approve.
Birch said the acquisition will result in a communications, cloud and managed services provider with $700 million in annual revenue and 200,000 business customers. Both firms focus on small and mid-sized businesses.
“This transaction will create a nationwide communications and technology services powerhouse,” Birch chief executive Vincent Oddo said in a press release.
Of Birch’s 420 employees, about 225 are in metro Atlanta and Macon. About 800 of Cbeyond’s more than 1,300 employees are based in metro Atlanta.
Asked about potential job cuts as a result of the combination, Birch spokesman Greg Corwin said no integration plan has been developed but the company is excited about bringing together the two teams.
Cbeyond shareholders would receive between $9.97 and $10 a share in the deal. That’s well above where Cbeyond stock has traded recently, including its close of $7.08 on Friday. But it’s below Cbeyond’s heights prior to mid 2011, when it regularly was above $12 a share. It briefly shot above $40 in late 2007.
Cbeyond grew fast through the 2000s as it focused on providing voice and data connections to small and mid-sized businesses. Revenue soared, and the company laid plans to hire hundreds of new local employees during the economic downturn.
But competitors, particularly cable providers, stepped up competition to serve its client base. Cbeyond’s revenue slid and customers drifted away.
The company shifted its focus beyond voice and low-bandwidth data connections to provide cloud-based services and higher bandwidth connections.
“We’ve made nice progress on that transformation, but it has taken longer than we anticipated it would,” Rob Clancy, Cbeyond’s senior vice president of finance, said in an interview Monday with The Atlanta Journal-Constitution.
In November, Cbeyond announced it was investigating a possible sale of the company and other alternatives.
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