Tower operator Crown Castle to buy Lightower for $7.1 billion

(Reuters) - Tower operator Crown Castle International Corp CCI.N said it would buy privately held Lightower Fiber Networks for about $7.1 billion in cash to expand its fiber footprint in urban areas of the U.S. northeast.

Crown Castle, which has been looking to further diversify from its traditional tower business, said it was buying the company from a group of investors including Berkshire Partners LLC and Pamlico Capital.

The deal doubles Crown Castle’s fiber assets to about 60,000 route miles and gives it an opportunity to deploy small cell network in top northeastern metro markets, including Boston, New York and Philadelphia, the company said on Tuesday.

Small-cell towers are increasingly in demand by wireless carriers as they try to boost coverage and increase capacity, especially in urban areas.

Reuters reported last week that Crown Castle had made an offer for Lightower.

Crown Castle said it expects the deal to add about $465 million to $485 million to adjusted funds from operations before financing costs in the first full year of ownership and boost its annual dividend of $3.80 by 15 cents to 20 cents per share.

The company also said it expected Lightower to contribute $850 million to $870 million in site rental revenue.

Crown Castle said it has received financing commitments from Morgan Stanley Senior Funding Inc and BofA Merrill Lynch of about $7.1 billion for new unsecured bridge facility.

Morgan Stanley & Co LLC was Crown Castle’s financial adviser, while Cravath, Swaine & Moore LLP provided legal counsel.

Evercore and Citigroup Inc were Lightower’s financial advisers, with Ropes and Gray LLP as its legal counsel.

Reporting by Rishika Sadam in Bengaluru; Editing by Anil D’Silva