MegaPath Sells Off Managed Services Business to Cloud Networking Provider GTT

In the second major business announcement of the year, MegaPath (News - Alert) has agreed to sell its Managed Services business to cloud networking provider GTT Communications. GTT will shell out $144.8 million in cash as well as $7.5 million in common stock in the acquisition, which covers MegaPath’s private WAN, Internet access services and managed security and other services.

The buyout announcement follows the January news that MegaPath had sold its Network Services business unit to Global Capacity (News - Alert), a provider of data networking connectivity solutions. That deal created a $300 million combined company reaching more than 14 million businesses throughout the U.S.

“In 2014, MegaPath made the strategic decision to consolidate our business and place increased focus on high-growth, strategic opportunities,” said D. Craig Young, executive chairman, MegaPath. “This agreement will provide us with additional resources to drive further innovation in our unified communications and cloud offerings and leverage our existing leadership on the communications and security front to build a dominant cloud business.”

The company plans to expand its Internet connectivity offerings and will also continue to offer cloud-based services to customers and partners. MegaPath will also maintain service provider wholesale relationships with companies like GTT as well as provide private networking and managed security services.

GTT will benefit from MegaPath’s more than 500 large multinational managed services clients and a business that generated around $124 million in recurring revenue last year. The cloud provider has been building out its own business and acquired communications and data services provider UNSi last October. The company added high capacity Ethernet and MPLS WAN solutions as well as a range of managed services to GTT’s growing portfolio and also brought the firm more than 2,000 U.S. clients.

"This acquisition furthers our growth strategy to expand our cloud networking services by adding a comprehensive portfolio of managed services,” said Rick Calder (News - Alert), president and CEO of GTT, of the MegaPath acquisition. “We are adding significant expertise to deliver managed security services with multi-layered solutions to protect large enterprises from cyber threats.”