* Rogers says buy aids business, government offering
* Deal should close in first quarter of 2011 (Adds details, analyst comment)
TORONTO, Oct 5 (Reuters) - Rogers Communications (RCIb.TO) said on Tuesday it would pay C$425 million ($417 million) in cash to buy Atria Networks to boost its services to the public sector and small and medium-sized businesses.
Kitchener, Ontario-based Atria, owned by Birch Hill Equity Partners, has more than 1,100 customers and supplies 3,800 buildings in Ontario with connectivity via 5,600 km of fiber optic cable, Rogers said in a statement. Atria has 130 employees.
Analyst Jeff Fan from Scotia Capital said the price, at around 12 times Atria's earnings, was higher than expected but necessary to snare the assets in a competitive sale.
"Anything less than 10 times would have been a surprise," he said.
Toronto-based Rogers, which owns Canada's biggest wireless company and operates cable and media businesses, said Atria would help it carry more data within and adjacent to its cable operations.
"The acquisition of Atria strategically fits with our enterprise strategy to offer on-net, high growth data services to small and medium sized businesses," Rogers Chief Executive Nadir Mohamed said.
Rogers expects to close the purchase in the first quarter of 2011, pending regulatory approval.
$1=$1.02 Canadian Reporting by Alastair Sharp