Zayo has reached a deal to acquire Neutral Path Communications and Near North Partners for $31.5 million, marking the latest in a string of tuck-in acquisitions the service provider has made of regional fiber operators.
Neutral Path is a long-haul infrastructure provider, operating a fiber network in the Midwest.
Like other acquisitions made to enhance certain parts of its network in specific geographies, like Optic Zoo Networks and Spread Networks, Neutral Path is about providing regional scale.
By acquiring Neutral Path, Zayo will add 452 owned plus additional leased route miles to its North American network, including a high-count fiber route from Minneapolis to Omaha. Zayo said the assets are “highly complementary” to its midwestern long haul dark fiber footprint.
Jack Waters, CTO and president of Fiber Solutions at Zayo, said in a release that the Neutral Path deal reflects the company’s strategy of “acquiring companies that add strategic assets that we can leverage immediately.”
Waters added that due to “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.”
Upon completing this acquisition, Zayo will be able to sell multicity dark fiber and lit fiber solutions from Minneapolis into Omaha, extending to Denver, Kansas City, Tulsa, Dallas, Des Moines, Chicago and other major markets. The network was architected to provide convenient options for carrier backhaul (both wireline and wireless) from the cities along the route to further enable broadband expansion in this area of the country.
Zayo expects Neutral Path to generate $2.1 million in annualized EBITDA for the quarter ended March 31, 2018. Within four quarters of the acquisition closing date, the service provider expects to achieve about $0.6 million in annualized cost synergies.
After meeting regulatory approvals and customary closing conditions, Zayo expects the acquisition to close in the second calendar quarter of 2018. The purchase price is subject to net working capital and other customary adjustments, as well as a contingent payment based on sales performance through June 30, 2018.
From a broader network infrastructure trend perspective, Zayo’s acquisition of Neutral Path caps off what’s already been a busy week of acquisitions on the fiber front. Regional fiber operator Conterra just signed a deal to acquire Network USA, while LOGIX garnered a fiber swap with FiberLight in Texas. Meanwhile, Venture Capital firms continue to gain a hand in fiber providers, with Grain Management purchasing a controlling interest in fiber provider upstart WANRack.