Zayo Group Holdings, Inc. (NYSE: ZAYO) said that it has entered into an agreement to acquire substantially all of Neutral Path Communications and Near North Partners assets for $31.5 million. The acquisition adds 452 owned plus additional leased route miles to Zayo's North American footprint, including a unique, high-count fiber route from Minneapolis to Omaha to its network.
Zayo plans for the transaction to close in the second calendar quarter of 2018, subject to regulatory approvals and customary closing conditions. The purchase price is subject to net working capital and additional customary adjustments, with a payment contingent upon sales performance through June 30, 2018.
Long-haul infrastructure provider Neutral Neutral Path is expected to generate $2.1 million in annualized EBITDA for the quarter ending March 31, 2018, says Zayo. Within four quarters of the acquisition closing date, Zayo intends toachieve about $0.6 million in annualized cost synergies.
Operating a fiber-optic network in the Midwest, Neutral Path's assets correspond with Zayo's Midwestern long-haul dark fiber footprint. The transaction will enable Zayo to sell multi-city dark fiber and fiber-based lit solutions from Minneapolis into Omaha, reaching major markets such as Denver, Kansas City, Tulsa, Dallas, Des Moines, and Chicago. The network was designed to offer both wireline and wireless carrier backhaul options from the cities along the route, enabling additional broadband expansion in this area of the nation.
"This is another example of executing on our 'tuck-in' strategy, acquiring companies that add strategic assets that we can leverage immediately," said Jack Waters, Zayo CTO and president of Fiber Solutions. "Based on expressed customer demand, we're confident we will quickly be able to pursue the robust funnel of sales opportunities and grow the revenue base on these assets."
This transaction continues to advance Zayo's expansion through acquisition, which includes its acquisition ofVancouver-based Optic Zoo Networks for CAN$31 million earlier this month (see "Zayo's Vancouver footprint grows with Optic Zoo Networks acquisition").
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