EX-99.1
29
pressrelease-megapath.htm
PRESS RELEASE DATED MAY 10, 2018 OF FUSION CONNECT, INC. ANNOUNCING ITS PROPOSED ACQUISITION OF MEGAPATH HOLDING CORPORATION
Blueprint
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Fusion Announces Definitive Agreement to Acquire
MegaPath
Integrated Cloud Services Provider Adds $70 Million
Incremental Annual Revenue, Over 8,000 Business Customers, and
Enhanced Sales and Distribution Capabilities
NEW
YORK, NY -- May 10, 2018 -- Fusion (NASDAQ: FSNN), a leading
provider of cloud services, announced today that it has signed a
definitive agreement to acquire privately-held MegaPath Holding
Corporation ("MegaPath"). Based in Pleasanton,
California, MegaPath provides a robust, fully-integrated suite of
cloud services including Unified Communications as a Service
(UCaaS), cloud computing, security, SD-WAN and cloud connectivity.
The transaction is valued at under 5.0x pro forma Adjusted EBITDA
including anticipated cost synergies realized within 12 months of
closing.
Total
consideration in the transaction is $71.5 million. Up to
$10.0 million of the consideration is payable at
Fusion's election in unregistered shares of Fusion common
stock priced at $5.78 per share. Fusion intends to fund the cash
portion of the consideration via borrowings under its First Lien
Senior Secured Credit Facility, $62.0 million of which is
currently held in escrow for this acquisition. The transaction is
expected to close within the next 90 days, subject to receipt of
certain regulatory approvals and other customary closing
conditions.
Highlights
●
Contributes
additional financial scale with approximately $70 million in
annual revenue, 95% of which consists of contracted monthly
recurring revenue (MRR), and adjusted EBITDA of approximately
$15 million including anticipated cost synergies
●
Adds more than
8,000 small and medium business and large enterprise customers,
with an average monthly revenue per customer (ARPU) of $750 and
1.0% monthly churn
●
Provides a robust,
customizable and highly scalable back office/OSS platform that is
expected to be utilized across the full company to support
enterprise customer needs and increase efficiency
●
Adds approximately
45 quota-bearing sales representatives across direct and indirect
sales channels as well as a number of distribution partners,
driving upselling and cross-selling opportunities and deepening
Fusion's strong relationships throughout the Channel Partner
sales channel
●
Brings a highly
capable staff of experienced cloud services professionals with
expertise to facilitate more rapid integration of the businesses
and execution of Fusion's strategy
Matthew
Rosen, Fusion's Chairman and CEO, said, "This
transaction is further evidence that Fusion is rapidly building a
cloud services industry leader around our unique and compelling
single-source strategy. MegaPath is an ideal fit with our strategic
objectives as it adds a diverse, high-value business customer base,
a team of cloud services experts, and incremental financial scale,
with a high percentage of MRR, high ARPU and low churn relative to
industry averages. Given the similarities between our businesses,
we expect the MegaPath acquisition to facilitate the customer,
operational and financial integration of Birch, enabling us to
drive Fusion's strategy more efficiently across the entire
organization".
-1-
"The
Cloud Services market is recognizing the superior value of
integrated solutions from a single-source provider", said
Craig Young, MegaPath's CEO. "Fusion's
differentiated strategy, its high-quality integrated product suite
and its scalable platform are therefore a natural fit with
MegaPath's business and culture. Our participation in the
equity of Fusion through this transaction underscores our
confidence that the combination of the two companies will create
significant value for shareholders. Furthermore, our customers will
continue to benefit from the same high levels of service quality,
customer care and innovation from Fusion that they've come to
expect from MegaPath".
Bank
Street Group served as the exclusive financial advisor to MegaPath
in connection with this transaction.
About Fusion
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.
Forward Looking Statements
This
press release contains forward-looking statements relating to
future events. Statements in this press release that are not purely
historical facts, including statements regarding Fusion's
beliefs, expectations, intentions or strategies for the future, may
be "forward-looking statements" under the Private
Securities Litigation Reform Act of 1995. Such statements consist
of any statement other than a recitation of historical fact and may
sometimes be identified by the use of forward-looking terminology
such as "may", "expect",
"anticipate", "intend",
"estimate" or "continue" or the negative
thereof or other variations thereof or comparable terminology. The
reader is cautioned that all forward-looking statements are
speculative, and there are certain risks and uncertainties that
could cause actual events or results to differ from those referred
to in such forward-looking statements. Important risks regarding
the Company's business include the Company's ability to
complete the acquisition of MegaPath, its ability to obtain the
required approvals necessary to close that transaction, and its
ability to integrate that business following the closing; the
Company's ability to comply with covenants included in its
debt agreements; competitors with broader product lines and greater
resources; emergence into new markets; natural disasters, acts of
war, terrorism or other events beyond the Company's control;
and other factors identified by Fusion from time to time in its
filings with the Securities and Exchange Commission, which are
available through http://www.sec.gov. However, the reader is
cautioned that Fusion's future performance could also be
affected by risks and uncertainties not enumerated
above.
Fusion Contact
Brian Coyne
(212) 201-2404
bcoyne@fusionconnect.com
Investor Relations
Chris Tyson
MZ North America
(949) 491-8235
FSNN@mzgroup.us
-2-

EX - 99 . 1 29 pressrelease - megapath . htm PRESS RELEASE DATED MAY 10 , 2018 OF FUSION CONNECT , INC . ANNOUNCING ITS PROPOSED ACQUISITION OF MEGAPATH HOLDING CORPORATION Blueprint ------------------------------------------------------------------------------------------------ ------------------------ Fusion Announces Definitive Agreement to Acquire MegaPath Integrated Cloud Services Provider Adds $ 70 Million Incremental Annual Revenue , Over 8,000 Business Customers , and Enhanced Sales and Distribution Capabilities NEW YORK , NY -- May 10 , 2018 -- Fusion ( NASDAQ : FSNN ) , a leading provider of cloud services , announced today that it has signed a definitive agreement to acquire privately - held MegaPath Holding Corporation ( " MegaPath " ) . Based in Pleasanton , California , MegaPath provides a robust , fully - integrated suite of cloud services including Unified Communications as a Service ( UCaaS ) , cloud computing , security , SD - WAN and cloud connectivity . The transaction is valued at under 5 . 0x pro forma Adjusted EBITDA including anticipated cost synergies realized within 12 months of closing . Total consideration in the transaction is $ 71.5 million . Up to $ 10.0 million of the consideration is payable at Fusion 's election in unregistered shares of Fusion common stock priced at $ 5.78 per share . Fusion intends to fund the cash portion of the consideration via borrowings under its First Lien Senior Secured Credit Facility , $ 62.0 million of which is currently held in escrow for this acquisition . The transaction is expected to close within the next 90 days , subject to receipt of certain regulatory approvals and other customary closing conditions . Highlights ● Contributes additional financial scale with approximately $ 70 million in annual revenue , 95 % of which consists of contracted monthly recurring revenue ( MRR ) , and adjusted EBITDA of approximately $ 15 million including anticipated cost synergies ● Adds more than 8,000 small and medium business and large enterprise customers , with an average monthly revenue per customer ( ARPU ) of $ 750 and 1 . 0 % monthly churn ● Provides a robust , customizable and highly scalable back office / OSS platform that is expected to be utilized across the full company to support enterprise customer needs and increase efficiency ● Adds approximately 45 quota - bearing sales representatives across direct and indirect sales channels as well as a number of distribution partners , driving upselling and cross - selling opportunities and deepening Fusion 's strong relationships throughout the Channel Partner sales channel ● Brings a highly capable staff of experienced cloud services professionals with expertise to facilitate more rapid integration of the businesses and execution of Fusion 's strategy Matthew Rosen , Fusion 's Chairman and CEO , said , " This transaction is further evidence that Fusion is rapidly building a cloud services industry leader around our unique and compelling single - source strategy . MegaPath is an ideal fit with our strategic objectives as it adds a diverse , high - value business customer base , a team of cloud services experts , and incremental financial scale , with a high percentage of MRR , high ARPU and low churn relative to industry averages . Given the similarities between our businesses , we expect the MegaPath acquisition to facilitate the customer , operational and financial integration of Birch , enabling us to drive Fusion 's strategy more efficiently across the entire organization " . - 1 - " The Cloud Services market is recognizing the superior value of integrated solutions from a single - source provider " , said Craig Young , MegaPath 's CEO . " Fusion 's differentiated strategy , its high - quality integrated product suite and its scalable platform are therefore a natural fit with MegaPath 's business and culture . Our participation in the equity of Fusion through this transaction underscores our confidence that the combination of the two companies will create significant value for shareholders . Furthermore , our customers will continue to benefit from the same high levels of service quality , customer care and innovation from Fusion that they ' ve come to expect from MegaPath " . Bank Street Group served as the exclusive financial advisor to MegaPath in connection with this transaction . About Fusion 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 . Forward Looking Statements This press release contains forward - looking statements relating to future events . Statements in this press release that are not purely historical facts , including statements regarding Fusion 's beliefs , expectations , intentions or strategies for the future , may be " forward - looking statements " under the Private Securities Litigation Reform Act of 1995 . Such statements consist of any statement other than a recitation of historical fact and may sometimes be identified by the use of forward - looking terminology such as " may " , " expect " , " anticipate " , " intend " , " estimate " or " continue " or the negative thereof or other variations thereof or comparable terminology . The reader is cautioned that all forward - looking statements are speculative , and there are certain risks and uncertainties that could cause actual events or results to differ from those referred to in such forward - looking statements . Important risks regarding the Company 's business include the Company 's ability to complete the acquisition of MegaPath , its ability to obtain the required approvals necessary to close that transaction , and its ability to integrate that business following the closing ; the Company 's ability to comply with covenants included in its debt agreements ; competitors with broader product lines and greater resources ; emergence into new markets ; natural disasters , acts of war , terrorism or other events beyond the Company 's control ; and other factors identified by Fusion from time to time in its filings with the Securities and Exchange Commission , which are available through http://www.sec.gov . However , the reader is cautioned that Fusion 's future performance could also be affected by risks and uncertainties not enumerated above . Fusion Contact Brian Coyne ( 212 ) 201 - 2404 bcoyne@fusionconnect.com Investor Relations Chris Tyson MZ North America ( 949 ) 491 - 8235 FSNN@mzgroup.us - 2 -
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