Zayo Group closes on $2.3B purchase of AboveNet

It’s the largest acquisition ever for Zayo, a privately held Louisville-based telecom which sells wholesale access to its fiber-optic network. It eclipses last year’s $345 million purchase of Seattle-based 360networks Holding Co.

“With the addition of AboveNet’s talent and assets, Zayo is well positioned to be the leading provider of bandwidth infrastructure solutions to the largest consumers of bandwidth in the U.S.,” Zayo Group President and CEO Dan Caruso said.

“With transatlantic capacity, a deep London metro network and access to major cities in Europe, we can begin to address customers needs in key international markets as well,” he added.

Also Monday, Zayo said it has raised $3.34 billion in financing for the AboveNet purchase, as well as for general purposes and to boost liquidity, including $472 million in equity financing in a round led by GTCR LLC, and $2.87 billion in new debt.

Other equity-round participants include Charlesbank Captital Partners, Battery Ventures and Centennial Ventures.

Buying White Plains, N.Y.-based AboveNet (NYSE: ABVT) more than doubles Zayo Group’s employee head count. AboveNet has about 700 employees to Zayo Group’s 482 today.

Combining the companies fleshes out both businesses’ networks and customer markets, Glenn Russo, Zayo Group executive vice president of corporate strategy, said when the buyout offer was announced in March.

“We view them as a very comparable business with a similar focus,” he said.

AboveNet’s network adds to Zayo Group’s in the Northeast and is particularly strong in the New York-New Jersey area, he said. That’s considered a key telecom market due because it’s an international financial services and media hub.

“While we have network in that area, it’s not nearly as deep and as broad,” Russo said. “Our networks are very complementary.”

AboveNet has operations in London, Paris, Amsterdam and Frankfurt, meaning the deal gives Zayo a European presence.

Zayo generates nearly 70 percent of its revenue from telecom-to-telecom service business, Russo said. AboveNet, alternately, generates a nearly equal portion of its business from sales to large corporations.

AboveNet emerged from Chapter 11 bankruptcy reorganization in 2003 and has become a profitable telecom infrastructure seller.