By Marc Vartabedian, Wall Street Journal
Fiber internet provider Everstream Solutions LLC said it is buying its smaller peer Rocket Fiber LLC, which is backed by Detroit business mogul Dan Gilbert.
The purchase, which is expected to close in this year’s second quarter, comes as Cleveland-based Everstream closes a $200 million debt facility that will be used in part to continue its spree of acquisitions of Midwestern fiber providers, Everstream President and Chief Executive Brett Lindsey said in an interview.
Mr. Lindsey declined to disclose the purchase price, but said the Rocket Fiber deal and the acquisition of another fiber internet provider earlier this month are worth roughly $100 million together.
Everstream’s expansion in the Midwest comes as technology giants compete to build out fiber networks across the U.S. Microsoft Corp., for instance, has partnered with an Ohio-based provider to offer internet to rural areas in Ohio, Indiana and Illinois, while Facebook Inc. is building a fiber network to bring connectivity to parts of West Virginia and elsewhere.
Rocket Fiber CEO & co-founder Marc Hudson said Mr. Gilbert is his company’s sole investor but declined to say how much the company had raised.
The deal expands Everstream’s footprint in Michigan. With two offices in downtown Detroit and roughly 75 employees, Rocket Fiber primarily serves business in the city’s downtown. The company was founded in 2014 with backing from Mr. Gilbert, the founder of Quicken Loans Inc. He also owns the Cleveland Cavaliers basketball team and started a venture-capital fund called Detroit Venture Partners, among other ventures.
“Detroit has undergone extraordinary growth in the last five years, making the acquisition of Rocket Fiber and its strong presence in Detroit the perfect complement to our existing Michigan network,” Mr. Lindsey said.
Everstream said in January it would invest $250 million this year to build out new fiber infrastructure across the Midwest. The company also plans to enter five new cities and hire 100 new employees.
The Rocket Fiber deal will be Everstream’s fifth acquisition since 2016. The company purchased St. Louis-based fiber provider Arch Fiber Networks last year, after buying Michigan-based providers Great Lakes Comnet and Comlink in 2016 and Lynx Network Group in 2017.
Everstream was acquired by Australian investment firm AMP Capital in 2018.