Lightower, Sidera Merging In $2B Deal To Battle Verizon, AT&T

Two aggressive Northeast private fiber optic services providers will merge in a $2 billion deal financed by Berkshire Partners in what appears to be a challenge to Verizon Communications.

Lightower Fiber Networks of Boxborough, Mass., which operates 6,600 fiber miles of high-speed communications, will combine with Sidera Networks, of New York, which operates 13,500 route miles of fiber, including 125 data centers that serve more than 40 financial exchanges.

Sidera's path extends south to Miami and west to Chicago.

Lightower CEO Rob Shanahan will head the enlarged company. Berkshire Partners, a Boston private equity firm that has no ties to Warren E. Buffett's Berkshire Hathaway (NYSE:BRK/A), will finance the deal.

Given its New York focus, the deal looks targeted to Verizon Communications (NYSE:VZ), the No. 2 U.S. telecommunications carrier, which is based in New York, as well as Dallas-based AT&T Inc. (NYSE:T), the No. 1 carrier, which serves most of the enterprises in the Northeast.

Shares of Verizon rose 3 cents to $43.48 in Thursday trading while those of AT&T fell 12 cents to $33.66.

“Lightower and Sidera together will offer customers an industry-leading, fiber-based network,” Shanahan said. Sidera CEO Mike Sicoli, whose future is not certain, said the deal “is highly complimentary.”

The deal requires regulatory approval and could be completed within three months, the companies said.

Lightower was formally a unit of National Grid (NYSE:NGG) of the UK, which sold it in 2007 to two private groups, M/C Partners and Pamlico Capital, which said they will retain their investments in the bigger company.

Sidera Networks, which has built its company selling advanced telecommunications services to business, has had major financing from ABRY Partners, which also said it will retain its investment in the enlarged company.

Specific financial detail weren't disclosed but likely will follow in regulatory filings.

Berkshire Partners, of Boston, has invested more than $11 billion since 1986, with a major interest in communications, consumer products and business services.