GTT to acquire Interoute

Adds 72,000 km fiber network in Europe Deepens cloud networking service platform

MCLEAN, Va., Feb. 26, 2018 — GTT Communications, Inc. (NYSE: GTT), the leading global cloud networking provider to multinational clients, announced today a definitive purchase agreement to acquire Interoute, operator of one of Europe’s largest independent fiber networks and cloud networking platforms, for approximately €1.9 billion ($2.3 billion) in cash.

The strategic combination:

• Significantly augments scale, expanding GTT’s Tier 1 global IP network with one of Europe’s most extensive fiber footprints. The network includes over 400 points of presence, spanning 24 metro areas and interconnecting 126 cities across 29 countries.

• Strengthens GTT’s leadership position in software-defined wide area networking (SD-WAN) with expanded capabilities.

• Adds 15 data centers, 17 virtual data centers and 51 colocation facilities, enhancing GTT’s cloud connectivity platform.

• Contributes infrastructure, edge and hosted services to GTT’s suite of cloud networking services.

• Expands and complements GTT’s multinational client base, adding over 1,000 strategic enterprise and carrier clients, primarily headquartered in Europe.

• Enhances GTT’s global team with a world-class sales, operations and customer service organization.

“The acquisition of Interoute represents a major milestone in delivering on our purpose of connecting people, across organizations and around the world,” said Rick Calder, GTT president and CEO. “This combination creates a disruptive market leader with substantial scale, unique network assets and award-winning product capabilities to fulfill our clients’ growing demand for distributed cloud networking in Europe, the U.S. and across the globe. Following our successful, proven acquisition model, we expect to complete this integration within three to four quarters post-close and achieve a post-synergy multiple of seven to eight times Adjusted EBITDA or better on a pro forma basis.”

“This is an exciting next chapter for Interoute, GTT, our customers and our team,” said Gareth Williams, Interoute CEO. “The combined assets and strengths of our two companies create a powerful portfolio of high-capacity, low-latency connectivity, and innovative cloud and edge infrastructure services to support our customers in the global digital economy.”

Interoute has received the strong support of its shareholders — the Sandoz Family Foundation, Aleph Capital and Crestview Partners — in its strategy of building and consolidating the European fiber, cloud and connectivity markets to create a player with significant scale and international presence.

Transaction Financing

The purchase price will be paid in cash at closing. GTT received committed debt financing for the transaction from a group of financial institutions and committed equity financing of $250 million from GTT’s largest institutional investor, The Spruce House Partnership, and Acacia Partners. GTT expects the transaction to close in three to six months, subject to customary regulatory approvals. At closing, after funding the acquisition with a combination of debt and equity, the expected ratio of total net debt to Adjusted EBITDA will be approximately 5.0-5.5:1, using pro forma combined Adjusted EBITDA plus expected cost synergies. After closing, over time, GTT expects to reduce the ratio of total net debt to Adjusted EBITDA to its long-term target range of 3.0-4.0:1.

Goodwin Procter LLP served as GTT’s legal advisers on this transaction.

Interoute Financial Information

Interoute reported revenues of €718 million and Adjusted EBITDA of €165 million for the 12 months ending September 30, 2017. These financial results attest to Interoute’s track record of significant growth and margin expansion through a combination of organic and inorganic initiatives. Interoute’s definitions of revenue and Adjusted EBITDA are based on International Financial Reporting Standards (IFRS) and its existing accounting practices. Credit Suisse International and Evercore acted as financial advisers to the selling shareholders, and Freshfields Bruckhaus Deringer acted as Interoute’s legal advisers.

Conference Call Information

GTT will hold a conference call to discuss this transaction, as well as its fourth quarter and full year 2017 financial results, as previously announced, on Thursday, March 1, 2018, at 10:00 a.m. EST. To participate in the live conference call, interested parties may dial +1.844.875.6916 or +1.412.317.6714, entering passcode 10112898 and asking for the GTT Communications call, or via webcast at GTT’s website.

A telephonic replay of the conference call will be available for one week and may be accessed by calling +1.877.344.7529 or +1.412.317.0088 and using the passcode 10112898. The webcast will be archived in the investor relations section of GTT’s website.