Acquisition converges data centers, fiber networks
Backhaul and data center services provider Zayo Group announced a $675 million agreement to purchase competitor Latisys Holdings, which handles complimentary data center co-location and other physical asset services.
Latisys currently operates eight domestic data centers comprising 185,000 square feet and producing 33 megawatts of power. The purchase of Latisys bumps Zayo’s portfolio up to 45 facilities in the United States, France and the United Kingdom.
Dan Caruso, chairman and CEO of Zayo, said both firms “have a great track record of creating value for investors and customers. The addition of Latisys into Zayo strengthens Zayo’s portfolio of infrastructure services.”
In addition to data centers, Zayo owns and operates metro fiber networks in all of the markets served by Latisys. From a business perspective, that means Zayo can now reach new data center customers already using Zayo-owned data transport systems.
“It’s an exciting day for our customers and employees to become part of a fast-growing company at the forefront of delivering unified infrastructure services to today’s dynamic market,” Latisys CEO Pete Stevenson said. “By integrating our state-of-the-art platform, coupled with efficient processes and great people, the combined entity will offer a highly compelling value proposition.”
Wells Fargo senior analyst Jennifer Fritzsche wrote in a research report that, as expected, Zayo continues “to be aggressive in terms of consolidating the still fragmented fiber industry.”
“This transaction provides Zayo with a data center presence in four new metropolitan markets in which Zayo already connects each of Latisys’s data centers with its fiber network,” Fritzsche wrote. “We view this deal positively as it allows Zayo to cross-sell fiber and bandwidth to Latisys’s enterprise customers and sell co-location and [infrastructure-as-a-service] to its existing carrier and content customers.”
Zayo went through an initial public offering in October, offering some 24 million shares of common stock at $19 per share.
