Zayo to acquire long haul infrastructure provider startup Neutral Path for $31.5 million

Zayo Group Holdings, Inc. announced today that it has entered into an agreement to acquire substantially all of the assets of Minnesota-based network neutral provider of fiber transport solutions startup, Neutral Path Communications and Near North Partners for $31.5 million. Neutral Path is a long haul infrastructure provider, operating a fiber network in the Midwest. The transaction will add 452 owned plus additional leased route miles to Zayo’s extensive North American network, including a unique, high-count fiber route from Minneapolis to Omaha. The assets are highly complementary to Zayo’s Midwestern long haul dark fiber footprint.

As a result, Zayo will be able to sell multi-city dark fiber and fiber-based lit 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. “This is another example of executing on our ‘tuck-in’ strategy, acquiring companies that add strategic assets that we can leverage immediately,” said Jack Waters, CTO and president of Fiber Solutions at Zayo. “Based on 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.”

The transaction is expected to close in the second calendar quarter of 2018, subject to regulatory approvals and customary closing conditions. 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.

Founded in 2011, Neutral Path was born out of broadband service provider demand for a simple and route mile efficient means to fill the growing need for fiber connectivity to key points in the Midwest. While many parts of this region have significant fiber resources, in many cases these facilities are underutilized because they are often difficult to identify, source, connect and ultimately provide an efficient, single source solution to a carrier’s connectivity needs.

Neutral Path provides that single source solution. We design our fiber network to optimize connections to key carrier aggregation points, enabling cost saving public and private peering and access to low cost upstream Internet providers. In addition, we establish wholesale relationships with existing fiber owner/operators with fiber capacity to last mile destinations off of our primary long haul path, thus making it easier for customers to reach these key aggregation points, while creating new revenue opportunities for our customer partners with this excess fiber.

Zayo provides communications infrastructure services, including fiber and bandwidth connectivity, colocation and cloud infrastructure to the world’s leading businesses. Customers include wireless and wireline carriers, media and content companies and finance, healthcare and other large enterprises. Zayo’s 126,000-mile network in North America and Europe includes extensive metro connectivity to thousands of buildings and data centers. In addition to high-capacity dark fiber, wavelength, Ethernet and other connectivity solutions, Zayo offers colocation and cloud infrastructure in its carrier-neutral data centers. Zayo provides clients with flexible, customized solutions and self-service through Tranzact, an innovative online platform for managing and purchasing bandwidth and services.