If anyone thought that Zayo's proposed purchase of AboveNet earlier this week would keep them to busy for further M&A for a while, it only took two days for that illusion to be shattered. In its second M&A announcement of the week, Zayo has agreed to acquire Michigan-focused metro operator Arialink for $18M.
Arialink operates 400 metro route miles in Lansing and Ann Arbor, connecting up 437 on-net buildings. The bulk of their assets are in Lansing, where they are the largest competitive provider. Along with the metro miles, they also have 530 regional route miles and have lately been building a 190 mile healthcare network with government funding. Interestingly, they also have a residential triple play business, but that piece will be spun off to Arialink's current owners before the close of the deal.
Zayo already had a presence in both Ann Arbor and Lansing derived largely from its eighth acquisition - a deal with CenturyTel (now CenturyLink of course and rather larger) back in the summer of 2008 for some metro loops and a few dozen lit buildings that CenturyTel had in turn acquired from KMC a few years earlier. The purchase of Arialink will transform that minimal Michigan presence into something much larger. Its integration into the rest of Zayo looks straightforward and not substantially different from Zayo's past acquisitions - whereas AboveNet's integration will be a rather larger job.
Is this enough to satisfy Zayo's M&A hunger for a while? Probably for a quarter or two, but who knows. There are still more assets out there that could interest them if they become available. The Arialink purchase is expected to close in Q2.
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