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How Zayo Spent $3.7B on Acquisitions

Ray Le Maistre
7/4/2014
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IPO filings are interesting documents to rummage through, as we found out this week when wholesale services specialist Zayo announced it had filed papers with the SEC for a public listing of its stock. (See Zayo Files for IPO.)

Zayo Group Inc. (NYSE: ZAYO) has become famous in the industry for its appetite for acquisitions, having completed 30 in the period between July 2007 and May 2014, with prices ranging from just $15,000 (Northwest Telephone California, May 2009) to $2.21 billion (AboveNet, July 2012).

Check out this table for the full list and then get the background on some of the more significant deals through our story links below.

Table 1: Zayo's Acquisitions July 2007-May 2014

Date Name of company acquired Price paid in $ thousands*
July 2007 Memphis Networx $9,173
August 2007 PPL Telecom $46,301
September 2007 Indiana Fiber Works $22,601
November 2007 Onvoy $69,962
November 2007 Voicepipe $2,800
February 2008 Citynet Fiber Networks $99,238
May 2008 Northwest Telephone $5,181
July 2008 CenturyTel Tri-State Markets $2,700
September 2008 Columbia Fiber Solutions $12,091
September 2008 CityNet Holdings Assets $3,350
September 2008 Adesta Assets $6,430
May 2009 Northwest Telephone California $15
September 2009 FiberNet $96,571
July 2010 AGL Networks $73,666
September 2010 Dolphini Assets $235
October 2010 American Fiber Systems $114,141
December 2011 360networks $317,891
December 2011 MarquisNet $13,581
May 2012 Arialink $17,129
Jul 2012 AboveNet $2,210,043
Aug 2012 FiberGate $118,335
October 2012 USCarrier $16,092
December 2012 FTS $109,700
December 2012 Litecast $22,160
May 2013 Core NAP $7,080
August 2013 Corelink $1,889
October 2013 Access $40,068
October 2013 FiberLink $43,137
March 2014 CoreXchange $17,503
May 2014 Geo $294,228
TOTAL $3,667,645
Source: Zayo S-1 filing with the SEC.
* All prices are net of cash acquired and includes assumption of debt and capital leases.

Since May, Zayo has struck further deals, closing the €58 million ($78.9 million) acquisition of French operator Neo Telecoms on July 1, and announcing the purchase of the AtlantaNAP data center on July 3 for $52.5 million. (See Zayo Group Acquires AtlantaNAP Data Center.)

For more on some of these deals, see:

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

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DOShea
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DOShea,
User Rank: Blogger
7/8/2014 | 7:21:10 AM
Re: Remarkable sequence...
The buying binge has been part of Zayo's identity for as long as I can remember. Similar to Level 3 in some ways for sure, though we have never heard much about problems integrating the acquistions. Going public, needless to say, will bring much more scrutiny to this company from top to bottom.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
7/5/2014 | 2:33:45 AM
The Bailout Business Plan
Ha!  Perhaps Zayo's strategy is to buy as many companies as it can and get as puffed up as it can...and leave it at that, profits-be-damned.

After all, as recent US history has taught us, if you're a big enough company, it doesn't matter if you fail.
bosco_pcs
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bosco_pcs,
User Rank: Light Sabre
7/4/2014 | 1:13:45 PM
Re: Remarkable sequence...
Ray:

 

Size matters! This roll-up strategy may even be cheaper than the built-out (remember the early years of Level 3?) 

 

I don't follow the infrastructure folks anymore but some of the acquisitions like Abovenet were rather hot at one point or another. So if Zayo can manage its finances well before the era of cheap money runs its course, it may very well prosper. Look at Level 3, what a survivor!

 

disclosure: I own a few shares of LVLT
Ray@LR
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Ray@LR,
User Rank: Blogger
7/4/2014 | 11:23:40 AM
Remarkable sequence...
That is an extraordinary list of acqusitions, and the company says there's more to come!

But how attractive will that, and the $3 billion debt pile, make its shares?

It'll be interesting to see how much it tries to raise - the $100 million figure is the usual placeholder with an initial S1.
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