Zayo acquires Optic Zoo Networks for $25M, deepens Canadian fiber footprint

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Zayo bolsters Canadian dark fiber reach with Optic Zoo Networks acquisition. (iStockPhoto)

Zayo took the time to start out the new year with a tuck-in acquisition of Vancouver-based Optic Zoo Networks, a deal that will expand the service provider’s fiber diet in Canada to serve digital media sector clients.

The Zoo acquisition strengthens Zayo’s position in Vancouver and Western Canada, adding 103 route miles and more than 100 on-net buildings to Zayo’s Vancouver footprint.

It will also deepen Zayo’s customer base, providing the ability to cross-sell to a diverse group of U.S. and Canadian customers. Optic Zoo’s high-count fiber, 270 on average, has ample capacity for new and existing customers.

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As the third largest city in Canada, Vancouver is a global gateway and Canadian business hub. The city is a growing center for digital media and film, professional services, biotechnology and software development—all large bandwidth consumers.

Zayo said that Optic Zoo’s revenue aligns with the service provider’s infrastructure-focused business segments, with the majority classified as fiber solutions.

Optic Zoo is expected to generate $1.53 million in annualized EBITDA for the quarter ended March 31, 2018. Zayo expects to achieve approximately $1 million in annualized cost synergies by year-end 2018 after what the service provider said will be a relatively straightforward integration process.

The deal closed on Friday, Jan. 18. Bank Street Group served as the exclusive financial adviser to Optic Zoo.

Canada has been a key target of growth for Zayo. At the tail end of 2015, the company gained an immediate fiber network presence in Canada by acquiring Allstream, MTS' business unit, for $348 million. The acquisition of Optic Zoo should complement the Allstream network well.

By acquiring Allstream, Zayo gained more than 9,000 route kilometers of metro fiber facilities concentrated in Canada's top five metro markets—Toronto, Montreal, Vancouver, Ottawa and Calgary—that connect nearly 3,000 on-net buildings.

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