Derivatives Help Drive Lighthouse Sidera Merger
January 2, 2013
The $2 billion merger between Lightower Fiber Networks and Sidera Networks announced last week will provide customers with greater reach and access in key markets, such as electronic trading of derivatives.
“Customers on both the buy and sell sides now have the ability to connect through a single provider,” say Alex Tabb, a partner with the Tabb Group.
The combined companies’ fiber-based network will operate throughout the Northeast, Mid-Atlantic and Midwest, as well as extending connections to critical landing sites and exchanges internationally, Berkshire Partners LLC, a Boston- based buyout firm, claims.
Lightower’s fiber footprint extends from New England, to eastern New York State, New Jersey, Long Island and New York City. Sidera operates networks from from Maine to Virginia, out to Chicago, as well as up to Toronto and across the Atlantic to London.
Berkshire agreed to acquire Lightower and Sidera in the $2 billion deal and merge them.
“The combined company, with its incredibly robust network, is well positioned for continued growth serving customers with an ever-increasing need for high-performance bandwidth,” Randy Peeler, a managing director at Berkshire Partners, said in a statement. The network will offer customers over 20,000 route miles and provide access to more than 6,000 on-net locations, including commercial buildings, data centers, financial exchanges, content hubs and other critical interconnection facilities..
“Lightower and Sidera together will offer customers an industry-leading, fiber-based network with a deeply experienced team supporting it,” stated Rob Shanahan, CEO of Lightower. Shanahan will head the combined group.
The joint network can also serve the most demanding application requirements with specific pedigrees including financial services and cloud/content verticals, Berkshire says. The merger is pending regulatory approval and is expected to close in the second quarter of 2013.
“With the joint network, the Chicago connection is key,” adds Tabb. “You now will have a network player that will provide derivatives access. That’s really important.”
CME Group, the world’s largest derivatives marketplace, is based in Chicago. Rival Intercontinental Exchange, which is acquiring the NewYork Stock Exchange, also has offices in Chicago and operates a greenhouse gas emissions market that is based there.
The 2010 Dodd-Frank Wall Street Reform Act is mandating that large amounts of credit-default swaps that used to be negotiated individually between two counterparties be standardized and traded on electronic exchanges, with central clearing of risks
CME and ICE compete in the clearing of swaps.