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Cloud networking provider GTT to buy European network operator for €1.9B

Global cloud networking provider GTT Communications Inc. agreed to buy fiber network operator and cloud networking platform provider Interoute for about €1.9 billion ($2.3 billion) in cash in a deal that GTT said will expand its network in Europe.

GTT said the acquisition will add 72,000 kilometers of fiber network in Europe, spanning 24 metro areas and interconnecting 126 cities across 29 countries. It also adds 15 data centers, 17 virtual data centers and 51 colocation facilities.

GTT received committed debt financing for the transaction from a group of financial institutions and committed equity financing of $250 million from GTT's largest institutional investor, The Spruce House Partnership, and Acacia Partners. The buyer expects the transaction to close in three to six months, subject to customary regulatory approvals.

At closing, after funding the acquisition with a combination of debt and equity, the expected ratio of total net debt to adjusted EBITDA will be about 5.0-5.5:1, using pro forma combined adjusted EBITDA plus expected cost synergies. After closing, over time, GTT expects to reduce the ratio of total net debt to adjusted EBITDA to its long-term target range of 3.0-4.0:1.

Goodwin Procter LLP served as GTT's legal advisers on this transaction.