AboveNet Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Internet service provider AboveNet (NYS: ABVT) soared 13% today after peer Zayo Group said it would purchase it for $2.2 billion.

So what: The deal values AboveNet at $84 per share and represents a 13% premium to its closing price on Friday. Zayo Group is making the move to expand its high-bandwidth fiber network in the face of voracious demand for data-hungry services.   

Now what: The deal isn't subject to financing and is expected to close by the middle of this year. "The combination of AboveNet's and Zayo's assets creates a dense fiber footprint throughout North America and Europe for a bandwidth hungry world," AboveNet CEO William LaPerch said. "This new company will be uniquely qualified to meet the expanding needs of enterprise and carrier customers." AboveNet has until April 17 to find a better offer, but with the shares now trading above Zayo's $84 offer, taking a bit off the table seems prudent.  

Interested in more info onAboveNet?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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