US B2B fibreco is back on the acquisitions trail, scooping up Viatel in Ireland. Having already completed 35 deals, the company has up to US$1.8bn to spend on further expansion.
US B2B fibreco Zayo (NYSE:ZAYO) has the capacity to carry out US$1.5bn to US$1.8bn more M&A, CFO Ken DesGarennes has said.
Speaking at the Wells Fargo TMT conference in New York, he said he would consider raising current debt levers from the current sub-4.5x to as much as 6x for the right deal.
The company has completed 35 deals to date on both sides of the Atlantic, last year buying Geo in the UK and Neo in France. Industry sources have previously suggested that having largely consolidated the US market, its focus will now be international.
Yesterday, it announced the acquisition of the infrastructure and non-Irish enterprise business of Viatel, part of Dublin-based telecoms and managed services provider Digiweb Group, for €95m (US$101.9m) in cash.
Arma Partners advised Viatel, while Gibson Dunn & Crutcher provided legal advice to Zayo.
Zayo indicated that it would fund the purchase with cash on hand, and that it expected the deal to close by the end of the year.
The Viatel acquisition will provide the acquisitive US player with pan-European intercity and metro fibre capability via an 8,400km fibre network across eight countries. The transaction will add 12 new metro networks, seven data centres and connectivity to 81 on-net buildings. Two wholly-owned subsea cable systems will provide connectivity between London-Amsterdam and London-Paris.
“Viatel’s long-haul fibre network and colo[cation] assets combined with Zayo’s existing national UK, France and US networks provides truly international, seamless connectivity for Zayo’s existing and new customers,” said Zayo chairman and CEO Dan Caruso.
“Our pan-European infrastructure capability addresses new growth opportunities, including connectivity to key subsea cable systems delivering traffic to and from high-growth regions such as Asia and Africa,” he added.
Viatel CEO Colm Piercy said: “The combination of Zayo and Viatel will provide far greater network reach and growth potential for Viatel’s customers.”
New execs appointed as focus shifts overseas
Karl Maier has been appointed president of international, replacing David Howson, who has decided to leave after five years with the company.
Maier described the Viatel acquisition as “transformative,” positioning Zayo to “capture significant organic and inorganic growth in Europe and beyond”.
Reporting to Maier are Alastair Kane, managing director of Zayo UK and Ireland, Florian Du Boys, CEO of Zayo France, and Bruce Garrison, senior director of Global Reach.
Maier has more than 15 years of experience leading international telecommunications and technology businesses. Most recently, he was CEO of Market Force Information, a retail-facing international customer intelligence solutions provider that he co-founded and expanded via organic means and acquisitions.
Chris Yost will meanwhile become interim general counsel, replacing Scott Beer, who has decided to leave after eight years.
Reorganisation to reflect diversifying business
Zayo also announced that it would publicly report results as four segments: dark fibre solutions; colocation and cloud infrastructure; network connectivity; and other, including field and construction services and network management; beginning in Q2 2016. Co-COO Chris Morley will oversee all four segments.
“Today’s announcement represents the next step in Zayo’s evolution,” said Zayo chairman and CEO Dan Caruso.
“Over the past eight years, we’ve grown from a start-up to an almost US$1.5bn revenue bandwidth infrastructure leader. These changes will accelerate our positive momentum and intensify our focus on key global opportunities.”
Zayo provides fibre and bandwidth connectivity to businesses including telecoms, media, financial services and healthcare.
Reporting its fiscal Q1 2016 results yesterday, the company said revenue was up US$4.9m to US$366.8m and adjusted EBITDA had increased US$4.5m to US$215.4m, while recording a net loss of US$15.2m as compared to a net income of US$5.1m in Q4 2015.
