Friday May 28, 5:19 pm Eastern Time
PRIMUS to buy Telegroup to improve European foothold
MCLEAN, Va., May 28 (Reuters) - In a move to improve its European foothold, global telecommunications provider Primus Telecommunications Group (Nasdaq:PRTL - news) said Friday it is set to buy Telegroup Inc. (OTC BB:TGRP - news) for $72 million.
Primus said that, along with an anticipated $150 million in sustainable retail revenues from an expanded European customer base, the purchase will also increase the company's North American retail base and enhance distribution of its Internet and data products.
The company will acquire all of Telegroup's retail assets and business in a cash and debt securities deal that is expected to be accretive to both gross margin and EBITDA.
''The acquisition of Telegroup's retail business dramatically expands PRIMUS's retail customer and revenue base and accelerates our entry into key markets -- particularly in Europe,'' said K. Paul. Singh, chairman and chief executive of Primus.
Of the $150 million in retail revenues expected from the acquisition, half of those will be from European business.
''We expect retail customer and agent retention and revenue growth to continue because Primus's more extensive global network and expanded product portfolio, including Internet and data products, will provide a lower cost platform and enhanced services,'' Singh said.
The deal is expected to generate a revenue run rate in Europe of over $225 million per year by the end of 1999, he said, and improves Primus's chances of meeting its $1 billion run rate revenue target, which had previously been projected for the fourth quarter in 2000.
The sale was approved by the U.S. Bankruptcy Court for the District of New Jersey, which has had jurisdiction over Telegroup's bankruptcy proceedings since it filed for protection under Chapter 11.
Telegroup's common stock was delisted from the Nasdaq National Market on February 17 and now trades in the Pink Sheets.
Shares of Primus closed at $16.625 on the Nasdaq stock market, down 12.5 cents from Thursday's close.
|
