Intermedia to acquire Shared Technologies Fairchild for 2.0 times revenue

Weekly Corporate Growth Report, Dec 1, 1997

The Deal: Shares Technologies Fairchild has agreed to be acquired by Intermedia Communications for $15/ share. The deal, which totals $366 million in cash for the equity, terminates an earlier agreement which called for Tel-Save Holdings to acquire Shared Technologies for $11.25/ share, plus the assumption of debt (see CGR #956). Intermedia has agreed to pay $237 million to Tel-Save, including $174 million for the purchase of certain Shared Technologies debt securities, accrued interest and breakup fees. Additionally, Intermedia has dropped its lawsuit protesting the agreement between Shared Technologies and Tel-Save. On the news, Intermedia rose $5, or 12%, to $46.75, while Shared Technologies were up 43.75, or 3.1%, at $14.625/ share.

Discussion: Shared Technologies Fairchild provides shared tenant services (STS) to tenants of modern, multi-tenant office building. Generally, it obtains the exclusive right from a building owner to install an on-site communications systems, called a private branch exchange (PBX), or an off-site communications system, called CENTREX, and to market telecommunications and office automation services and equipment to tenants. In 1996, shared tenant services made up 61% of revenues, while telecommunications systems accounted for 39%.

Intermedia Communications provides a full range of communications services to business and government end-user customers, long-distance carriers, Internet service providers, resellers, and wireless communications companies. The company also provides enhanced datservices, including frame relay and Internet access services.