Zayo Group acquires Latisys for $675M, expands presence in Midwest and West Coast

by Doug Pitorak
February 25, 2015

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zColo, Zayo Group’s data center product group, just got a big boost.

Zayo, a subsidiary of the Boulder-based Zayo Group Holdings, Inc., which provides bandwidth infrastructure in nearly 300 markets in the U.S. and Europe, announced recently that it closed its $675 million acquisition of Latisys, adding eight facilities to zColo and increasing the number of data centers Zayo owns in the U.S. and Europe to 45.

Headquartered in Englewood, Colo., Latisys provides businesses with Infrastructure-as-a-Service (IaaS) technologies that are tailored to their specific needs. With data centers in Ashburn, VA., Chicago, California and Denver, Latisys’ solutions cover enterprise cloud, managed hosting and data center colocation.

Colocation, one Latisys business that accounts for 75 percent of revenue, will now be part of zColo, a move expected to increase zColo’s annualized income to about $183 million — an 80 percent spike.

“The acquisition of Latisys extends Zayo’s breadth and depth in the data center space and further enhances our infrastructure-based business model,” Dan Caruso, chairman and CEO of Zayo Group, said in a statement. “We will now be able to offer rich connectivity solutions to Latisys customers, while addressing increasing demand for colocation and IaaS solutions within our existing customer base.”

Effective immediately, Zayo’s customer base will have access to Latisys’ data center and IaaS portfolio. In turn, Latisys customers are able to use Zayo’s transport, fiber and IP network tools. Tranzact, Zayo’s bandwidth purchasing system, will now feature colocation and IaaS solutions.

zColo will continue to be overseen by Zayo’s Physical Infrastructure segment, which is directed by segment president Matt Erickson.

Also, Zayo announced that Chris Morley will work as president of Zayo Cloud and Connectivity, currently known as Zayo’s Lit Services segment. Latisys’ Cloud business, which equates to 25 percent of the company’s revenue, will be absorbed by Zayo Cloud & Connectivity. 

From July 2014 to Sept. 2014, Latisys earned adjusted EBITDA of about $11 million. Zayo funded the acquisition with proceeds from $700 million worth of senior unsecured notes. 

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