Telecom infrastructure provider Zayo Group Holdings Inc said on Wednesday it would buy smaller rival Electric Lightwave for $1.42 billion in cash to expand its fiber network on the U.S. West Coast.
Colorado-based Zayo, which provides fiber, bandwidth and telecom infrastructure to enterprises, said it expects to save over $40 million annually from the acquisition.
The deal is the latest in a series of mergers in the enterprise communications space as U.S. businesses' burgeoning demand for data and video fuels a revival in fiber optic services.
Last month, CenturyLink Inc agreed to buy Level 3 Communications Inc in a $24 billion deal to expand its reach.
Windstream Holdings Inc said earlier this month it would buy fellow U.S. telecom company EarthLink Holdings Corp in a deal valued at $1.1 billion to cut costs and better compete with rivals.
Electric Lightwave, formerly known as Integra Telecom, provides telecom infrastructure in the western United States, while Zayo owns fiber networks in cities including New York, Chicago, Paris and London.
Zayo said it would fund the purchase with cash and debt.
Gibson Dunn & Crutcher LLP was Zayo's legal adviser, while Latham & Watkins and Gray Plant Mooty provided legal counsel to Electric Lightwave.
(Reporting by Aishwarya Venugopal and Laharee Chatterjee in Bengaluru; Editing by Sai Sachin Ravikumar)