(Reuters) - Fusion Telecommunications International Inc plans to buy the cloud and business services unit of Birch Communications in an all-stock deal that it said would broaden its customer base.

Fusion shares rose 70 percent to $2.09 on Monday on news of the deal, which would form one of the largest North American cloud services providers, with more than 150,000 business customers, 30 data centers and 31,000 miles of fiber network.

Fusion’s management will run the combined company. However, private equity firm Birch Equity Partners LLC, Birch’s majority owner, will get 75 percent of the new company, while Fusion shareholders will have only 25 percent. Together, the company expects annual revenue of $575 million.

The deal is the latest example of consolidation in the business communications sector as smaller vendors like Fusion try to lure enterprise customers from larger companies such as AT&T Inc and Verizon Communications Inc by offering integrated voice, data and cloud services.

Last year CenturyLink Inc announced plans to buy Level 3 Communications Inc for $24 billion. The deal is still awaiting regulatory clearance.

“We are picking up a much broader set of customers,” said Fusion Chief Executive Officer Matthew Rosen, who will become the combined company’s chairman. “We’ll be able to cross-sell and upsell everything from contact center software to storage, disaster recovery and other cloud solutions.”

The deal does not include Birch’s less-profitable business of providing communications services to consumers.

Birch Equity and other Birch shareholders will get about 73 million Fusion shares that the companies said would be worth $3.85 each, or about $281 million in total. That would be a premium of more than 200 percent to Fusion’s closing price on Friday.

Fusion has agreed to assume Birch’s existing debt of about $458 million. It will refinance that along with its own debt of about $101 million.

“We believe that given the cash flows, we are in a good position,” Rosen said.

Birch, a private nationwide telecommunications company founded in Atlanta in 1996, had already been diversifying. It bought cloud provider CBeyond for $323 million in 2014 to expand its services to small- and medium-size businesses.

Fusion, a smaller New York-based company with a market capitalization of $47.94 million on Monday, has done several smaller deals as well, such as the $28 million acquisition of business communications firm Apptix last year.

Fusion’s financial adviser was FTI Consulting, while Birch’s was Moelis & Co.