Zayo Group plans to acquire FiberGate for $117 million. The dark fiber provider has 650 route miles of fiber in the Washington, D.C., metro area. The acquisition will add 130,000 fiber miles to Zayo’s metro network in and around the nation’s capital metro area. The FiberGate network also includes 315 on-net buildings and two recently completed expansions to Frederick and Baltimore, Md. Dark fiber is FiberGate’s only product and the network covers one geographic region – Baltimore, suburban Maryland, Washington, D.C., and Northern Virginia.
The acquisition is important to Zayo because FiberGate has deep metro fiber assets in the greater Washington, D.C.. area, Glenn Russo, executive vice president of corporate strategy and development, told Backhaul Bulletin. “Also, they have a business model that aligns well with Zayo,” he said. “FiberGate focuses on selling only dark fiber, a business and product Zayo has been a big proponent of, and has created a lot of momentum selling.”
Russo also told the Bulletin that Zayo will gain deep fiber assets in a key market and customer relationships in the nation’s capital that are typically hard to penetrate. “We feel we will be able to effectively serve the government vertical,” he said.
“The Washington, D.C./Northern Virginia area is a uniquely important geography for government, data centers and Internet connectivity,” said Dan Caruso, chief executive officer of Zayo Group, in a company release. “The combination of AboveNet’s and FiberGate’s networks will create an extensive fiber footprint in this strategic bandwidth corridor.”
The transaction is subject to customary approvals and will be funded from cash on hand. The transaction is expected to close by the end of the third quarter in 2012.