Covad Communications has found a buyer in Platinum Equity, which specializes in mergers, acquisitions and operations. Platinum will buy Covad for $1.02 a share, in cash.
That’s a premium of 59 percent from Covad’s closing price on October 26, and will amount to a little over $300 million. Covad’s board has accepted the offer; the deal is contingent on approval from shareholders and regulatory agencies.
Covad president and CEO Charles Hoffman said the offer was too good to pass up. “Furthermore, Platinum’s approach will bolster the successful execution of Covad’s business strategy while providing the resources and support necessary for sustained growth. We believe that the resulting increased market competitiveness, improved capital structure, and enhanced product and network capabilities best position our customers, partners, and employees for the future.”
Platinum says it invests in companies that tend to be in cash flow businesses, have strong brands, provide mission-critical services, and have non-core assets. It has built a portfolio of companies largely unrelated to each other, and has minimal experience with communications companies.
“Covad has a stellar reputation for quality and innovation, and is one of the premier providers in the broadband access market,” said Johnny O. Lopez, partner and head of global mergers and acquisitions for Platinum Equity. “There is opportunity for growth as the demand for high-bandwidth services continues to evolve, and we’re eager to help Covad drive that growth.”
