NEW YORK, NY — August 28, 2017
Fusion (NASDAQ: FSNN), a leading cloud services provider, announced today that it has entered into a definitive agreement to acquire the Cloud and Business Services customers, operations and infrastructure of privately-held Birch Communications, which represents the majority of Birch's current revenues. The transaction is expected to close by the end of 2017, subject to customary approvals and closing conditions.
The combination is expected to create one of the largest cloud services providers in North America, with more than 150,000 business customers and a 100% Internet Protocol-based network, including 30 data centers, 31,000 fiber route-miles of network, and metro fiber assets in 11 major markets. The combined customer base is expected to demonstrate strong fundamentals, with monthly recurring revenue comprising approximately 87% of total revenue. In addition, the combined company will have significant opportunities for growth by cross-selling and upselling to existing customers with a comprehensive suite of cloud and business services.
The acquisition will not include Birch's legacy consumer and single-line business customers, which have lower profitability and Average Revenue Per Customer (ARPU) as well as higher churn rates.
The scale that this acquisition will bring to Fusion further accelerates the company's single-source cloud strategy. By delivering its fully integrated cloud solutions over a single platform, Fusion is able to solve the increasingly complex challenges of migrating to the cloud. Fusion offers customers a more efficient integration of cloud services and provides greater control over the end-to-end user experience, thereby avoiding the "finger pointing" often encountered when using multiple service providers.
"This acquisition is a major milestone in Fusion's targeted and disruptive strategy of becoming the leading single-source cloud services provider to business and enterprise customers," said Matthew Rosen, Fusion's Chief Executive Officer. "Customers increasingly demand an end-to-end experience that is reliable as well as efficient and innovative. Fusion is well positioned to provide these services having been first-to-market to pursue this strategy, and can now do so with increased scale and resources."
Mr. Rosen continued, "This combination will immediately move Fusion into the top tier of cloud services providers and establishes a robust platform from which to pursue aggressive value enhancing initiatives through both organic growth and strategic acquisitions. By leveraging the significantly larger scale of Fusion following the acquisition, the company will gain new efficiencies and greater cash flows, which we believe will drive shareholder value. We also expect that the new Fusion will gain broader awareness among investors and analysts, along with expanded access to the capital markets, which will further support our compelling growth strategy."
Vincent Oddo, Chief Executive Officer of Birch Equity Partners, said, "Matthew Rosen and his team have a unique and compelling strategy for addressing the challenges that so many businesses face when migrating to the cloud. Time and again, Fusion has demonstrated its ability to deliver innovative and integrated customer solutions, firmly establishing the company as the ideal partner for Birch. We are confident that the combination of our two companies will create significant value for our customers and all stakeholders."
Mr. Oddo continued, "Our common vision for the future, commitment to service excellence and culture of innovation provide a great foundation for the integration of our teams and our ability to attract customers with compelling cloud-based solutions. We are excited to participate in Fusion's ongoing success as shareholders in the combined company."
Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is the industry's single source for the cloud. Fusion's advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including cloud communications, contact center, cloud connectivity, and cloud computing. Fusion's innovative, yet proven cloud solutions lower our customers' cost of ownership, and deliver new levels of security, flexibility, scalability, and speed of deployment. For more information, please visit www.fusionconnect.com/.
Birch Communications is a leading North American Cloud and Business Solutions Provider. For more than 20 years, Birch has been recognized as a provider that delivers cost-effective solutions for small and mid-sized businesses as well as an exceptional customer experience. Birch's industry-leading IP-network and product portfolio are available across North America, and include: cloud communications, cloud connectivity and cloud computing. For more information, visit www.birch.com/.