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Primus to buy wholesale telecom services provider Arbinet in $28m all-share deal

Last updated: 06:03 12 Nov 2010 AEDT, First published: 07:03 12 Nov 2010 AEDT

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US telecom company Primus (OTCBB: PMUG) said Thursday it has agreed to acquire Arbinet Corp (Nasdaq: ARBX), a provider of wholesale telecom exchange services to carriers, for $28 million in an all-share transaction.

The deal, which is due to close in the first quarter of next year, is expected to add more than $300 million in annual revenue for Primus' global wholesale group, bringing the company's total annual consolidated run rate revenue to over $ 1 billion.

"Given that scale is critical in the wholesale business, we made the strategic decision to add Arbinet's thexchange and complementary international route capabilities, which we expect will benefit our combined international carrier customers as they look to outsource their wholesale needs to players of size," said chairman, president and CEO of Primus, Peter D. Aquino.

The acquisition will no doubt enhance Primus' direct voice carrier services portfolio, allowing customers the option to manage their access needs through Arbinet's wholesale voice trading exchange, which offers anonymous, automated traffic routing, trading as well as credit management and settlement.

Primus said the deal, which has been approved by both companies' boards, will also expand its footprint in Asia, Latin America and Eastern Europe. One of Primus' and Arbinet's principal stockholders has already agreed to support the transaction.

Separately, since bringing on new management, Primus has been looking to cell certain assets in the UK, France, Belgium and Italy to raise cash, taking in net cash proceeds of $7 million thus far for those businesses sold to date.

"We are committed to keeping all of our options open with respect to evaluating Primus' strategic alternatives, to proceeding with this process in the coming months to help unlock the value of the sum of the parts of the Primus portfolio, and to seeking ways to accelerate the transformation of our balance sheet," added Aquino.

In addition to the IP voice, data, mobile and internet services Virginia-based Primus provides to business and residential customers in the US, Canada, Australia and Brazil, the company is also one of the largest international wholesale service providers to fixed and mobile network operaters.

Primus was up 0.84% in early morning trading on Thursday.

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