Gillette acknowledges the perception in the marketplace that the increasing hostility of the economy is forcing companies to merge and that consolidation spells buyout by bigger companies of weaker entities. He says, however, that this is not the case in this deal.
"Neither side hobbled in here. Executives on both sides sought each other out. The boards of both companies agreed we could do business more expeditiously together than we each could on our own. This was choice versus need," he responds.
"This has been a tough year. It basically forces companies to see how to ensure capital. Down markets weed out the weak and there will probably be more carnage. Given the market it makes sense to take a business and collapse it and scale returns," he recognizes. "What we've done here, however, is come together on equal terms."
When asked about the differences between the two companies, Gillette says Eureka is "super regional" and has a strong presence in its five markets—-Los Angeles, New York, Florida, Philadelphia and Washington, DC. GGN has focused on "creating depth" in New York and not sought to "jump into other markets," according to Gillette. Once the two are merged, New Company will maintain the five markets and not seek to expand into others for the time being, according to Gillette.
"We both have a similar strategy of going after monogamous deals with building owners and have zero overlap in our clientele with the exception of one property here in New York," he adds. "We've had success seeking to become the preferred provider with riser access to some of the market's premier buildings."
Gillette was less enthusiastic about discussing the differences in the infrastructure of the two companies offer. He did say that it was a matter of "copper versus fiber" and that the fiber systems of Gillette will be "embraced" by New Company. He went on to add that the success of GGN's fiber systems has brought such word-of-mouth success to the company that it has had much of its business come to it since the first quarter this year.
Of the future goals of New Company, Gillette reports, "We'll be focusing on interacting the two companies." As GGN is still private he says he won't discuss details of its finances, but did say, "This is an all stock transaction. All the stock will be dumped into New Company together and the final closing should be by year's end. GGN is well capitalized and we have strong backers."
"It will be exciting to overlay our products on their sales force," he concludes. "We do expect to go IPO in the future, but that's not happening for anyone right now."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
