NEW YORK-World Access Inc., Atlanta, announced Aug. 17 it would acquire FaciliCom International Inc., Washington, D.C., by paying FaciliCom’s shareholders about $436 million and assuming $300 million in FaciliCom debt.
World Access, a publicly traded company, terminates international long-distance voice and data traffic in at least 200 countries. It also develops, manufactures and markets telecommunications network products, including digital microwave radio systems, cellular base stations, fixed wireless local loop systems, billing and network management systems, digital switches and intelligent multiplexers.
FaciliCom, which is privately held, provides end-to-end communications through a redundant digital network that, among other things, supports a variety of American National Standards Institute and International Telecommunication Union signaling interfaces, including Signaling System 7 and C7.
“We believe the combined minute volumes of FaciliCom and World Access will allow us to further reduce termination costs throughout the world, thereby allowing us to generate additional market share increases by passing along these reduced network costs to our customer base,” said John D. Phillips, chairman and chief executive officer of World Access.
“In addition, our operating teams have identified anticipated cost synergies of approximately $35 million on an annual basis, consisting of routing changes to take advantage of the least-cost routes for each country, savings on leased line costs, redundancies in switching centers and administrative cost savings.”
Donaldson, Lufkin & Jenrette Securities Corp. is World Access’ adviser in the transaction, which will be accounted for as a purchase. Lehman Brothers Inc. is FaciliCom’s adviser.
The acquisition is expected to close late this year, provided it receives approval from regulators, FaciliCom’s stockholders and bondholders and World Access’ stockholders. A formal vote of equity investors in both companies will be a formality, however.
World Access said that stockholders who collectively own a majority of its voting shares already have “entered into a voting agreement whereby they have committed to vote in favor of the merger.”
These include the Armstrong Group of Companies, which is a majority shareholder of FaciliCom and will become the single largest stockholder of the combined company, with about 20-percent ownership on a fully diluted basis, World Access said.
Armstrong, which is privately held, owns and operates cable TV systems, independent and international telephone providers, real estate companies and a variety of other businesses.
Also participating in the World Access voting agreement were other significant equity stakeholders, including MCI WorldCom Inc., Brown Brothers Harriman and senior management executives of World Access, the company said.
