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Uniti Group to acquire Gulf Coast data-transport provider for $700M

Uniti Group Inc entered into a definitive agreement to buy Southern Light LLC, a privately held data-transport services provider in the Gulf Coast region, for roughly $700 million in cash and equity, subject to customary closing conditions.

The acquisition, which is expected to close in the third quarter, follows Uniti's purchase of another data-transport provider, Hunt Telecommunications LLC, for $170 million in February.

The company said that Southern Light's organization and operations are "highly complementary" to Hunt, and both companies will be "tightly integrated" into Uniti Fiber, one of its primary business units, along with Uniti Towers and Uniti Leasing.

Southern Light, which includes a fiber network of more than 540,000 fiber-strand miles, and Hunt are expected to double Uniti Fiber's operational network to encompass more than 1 million fiber-strand miles and increase Uniti's aggregate strand miles to more than 4.8 million.

The acquisition consideration is comprised of $635 million in cash and roughly 2.5 million operating partnership units convertible on a one-for-one basis into shares of Uniti's common stock.

The company received financing commitments from Citigroup Global Markets Inc., JPMorgan Chase Bank NA and RBC Capital Markets LLC to provide the entire cash portion of the purchase price.

Uniti expects to bankroll the transaction using cash on hand, proceeds from potential debt or equity financings and borrowings under its revolving credit facility. The company's permanent financing is expected to include roughly $250 million in debt and $450 million in equity, with proceeds being used to pay the cash considerations for the Southern Light and Hunt acquisitions.

This transaction is intended to be leverage neutral on a pro forma basis following the expected permanent financing, according to a release.

Citigroup and RBC served as financial advisers and Davis Polk & Wardwell LLP served as legal counsel to Uniti, and SunTrust Robinson Humphrey Inc. served as exclusive financial adviser, and Morgan Lewis & Bockius LLP and McDowell Knight Roedder & Sledge served as legal counsel to Southern Light.