Lumen Technologies (NYSE: LUMN) has signed a definitive agreement with US$37 billion alternative investment firm Stonepeak Infrastructure Partners to sell its Latin American business for $2.7 billion.
Under the terms of the purchase agreement, Lumen will divest its Latin American business, which will operate as an independent, US-headquartered portfolio company of Stonepeak (the “New LATAM Company”).
The current Latin American leadership team and organisation will remain in place, led by Hector Alonso, Lumen’s president for the region, the company said.
Lumen, previously known as CenturyLink until the business rebranded in 2020, will also retain a strategic relationship with the New LATAM Company and continue to serve joint customers in the region.
Lumen president and CEO Jeff Storey, said: “This transaction unlocks value for our shareholders while allowing us to maintain our global presence through our strategic relationship with the New LATAM Company.
“This transaction allows Lumen to focus investments in key areas of the business to drive future growth while providing flexibility for our capital allocation strategy.”
Under the sale deal, Lumen will continue to serve customers in North America and the EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific) regions with needs in Latin America through its strategic partnership with the New LATAM Company.
This relationship includes reciprocal reselling and network arrangements that leverage each other’s extensive fibre footprints, data centres and other network assets. Upon the completion of the transaction, customers who seek services within the Latin America region will work directly with the New LATAM Company or through the strategic Lumen partnership.
Brian McMullen, Stonepeak senior managing director, said: “Stonepeak has been an early and active investor in digital infrastructure globally and we are looking forward to applying our experience and additional capital to Lumen’s Latin American business.”
Lumen and Stonepeak expect the transaction to close in the first half of 2022, upon receipt of all regulatory approvals in the U.S. and certain countries where the New LATAM Company operates, as well as the satisfaction of other customary conditions.
AustralianSuper, Australia’s largest pension fund, is investing alongside Stonepeak in the transaction.
The purchase agreement contains various customary covenants for transactions of this type, including various indemnities and purchase price adjustments. BofA Securities, Morgan Stanley & Co. LLC, Citi, and Goldman Sachs are acting as financial advisors to Lumen in connection with the transaction. Jones Walker LLP is serving as legal advisor.
Alonso added: “Stonepeak has made it very clear that they are committed to enterprises that operate in Latin America. This transaction provides the New LATAM Company with more autonomy to serve its customers and the enhanced ability to react to and invest in changing market conditions in the Latin America region.
“These customers will experience the same world-class network and services they have come to expect from a leadership team focused on their success.”
Whilst in Latin America Lumen divested its assets, over in Europe the company has expanded its fibre network infrastructure in France, Switzerland and Spain.
In France and Switzerland, Lumen increased its footprint with the construction of a unique new fibre route of more than 180 miles between Lyon, France and Geneva, Switzerland, connecting three new cities, Grenoble, Chambéry and Annecy. The length of the national Lumen network rings is approximately 3,500 route miles in France and 420 route miles in Switzerland.
In Spain, Lumen completed its national fibre ring by adding a new segment of more than 170 route miles between the city of Salou and the French border. Additionally, Lumen built a new metro network in Barcelona and connected to the MAREA trans-Atlantic subsea cable landing station in Sopelana. The national Lumen network ring in Spain is approximately 1,060 route miles.
Annette Murphy, managing director, EMEA, Lumen Technologies, said: “Our new fibre infrastructure investments in Europe demonstrate the continued commitment that Lumen has to this market, and to powering the next wave of growth and innovation for customers in the 4th Industrial Revolution.
“Companies are facing new challenges that require them to harness massive amounts of data at almost unimaginable speeds. The agile, reliable and secure Lumen network helps customers to leverage their data and adopt next-gen apps to unleash their business potential and deliver amazing digital experiences.”