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Zayo Buys UK Fiber Network Operator

Ray Le Maistre
5/16/2014
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It may have taken a short breather after a flurry of acquisitions, but Zayo is back on the M&A trail with a takeover deal that will bolster its European assets.

The wholesale services and dark fiber specialist has bought Geo Networks Ltd. for an undisclosed sum, a move that adds 2,100 route miles, including 1,800 around the UK and a route to the Irish capital of Dublin, to Zayo's portfolio, including 100 route-miles of fiber that runs through London's sewers. (See Zayo Acquires Geo Networks.)

The Geo network is hooked up to 587 buildings, including more than 130 data centers and exchanges in the UK. (See Surf's Up for Geo Networks and Geo Completes Fiber Ring Between UK & Ireland.)

While financial details were not released, Geo was known to be up for sale, with a price tag of up to 200 million (US$337 million), according to this Megabuyte analysis.

The Alchemy Investment Plan (Alchemy Ventures) acquired Geo in 2008 for 62 million ($104 million). (See Alchemy Acquires Geo.)

The move comes only weeks after Zayo Group Inc. (NYSE: ZAYO) paid 58 million ($80 million) for Paris-based Neo Telecoms, which runs a 350 route-miles metro fiber network in the French capital, connected to more than 500 buildings, and nine regional collocation centers around France. Neo serves more than 600 carrier and enterprise customers with dark fiber, IP, Ethernet, wavelength, and colocation services.

Zayo gained a foothold in Europe with the $2.2 billion acquisition of AboveNet in 2012 and has since invested in its UK network. (See Zayo Closes AboveNet Deal and Zayo Expands UK Network.)

It then went on a spending spree, buying multiple network operators in North America to build a significant portfolio of data transport infrastructure. (See Zayo Group Buys CoreXchange, Zayo Buys FiberLink, Zayo to Buy Access Communications, Zayo to Buy Litecast, and Zayo Continues Buying Binge With First Telecom.)

Zayo has been on the lookout for European takeover targets for a while, with the senior team in Europe saying all along that it is interested in buying companies, with real business plans and revenues, and not just buying standalone network assets. (See Zayo's Fiber Diet.)

Zayo, which is owned by a consortium of private equity firms, reported revenues of $278 million and a net loss of $43.7 million for the three months ending March 31, 2014 (its fiscal third quarter).

Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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Ray@LR
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Ray@LR,
User Rank: Blogger
7/4/2014 | 7:47:14 AM
Price paid by Zayo for Geo Networks
£175 million, according to Zayo's IPO filing papers...
mendyk
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mendyk,
User Rank: Light Sabre
5/16/2014 | 3:07:03 PM
Re: Are we seeing some long-term thinking here?
Exactly -- all clouds have a glass lining, if not a glass ceiling. It's easy to lose sight of the fact that virtualization doesn't exist without baseline reality.
Ray@LR
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Ray@LR,
User Rank: Blogger
5/16/2014 | 1:36:10 PM
Are we seeing some long-term thinking here?
The network is valuable, right? Decent fiber connectivity is what will make the cloud work -- there's value in these strands of glass, as long as the owners know where it is (and does everyone know where their assets are and what shape they are in?), and have the right tools to manage it efficiently. 

That, then, is the tricky bit.... but Zayo's owners clearly are taking a long-term view on these assets, which seems to make sense.
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