Cleveland fiber network to acquire Dan Gilbert's Rocket Fiber
A Cleveland-based fiber network is acquiring Quicken Loans founder Dan Gilbert's Rocket Fiber LLC internet service provider in a move that could help to make Detroit more of a tech hub.
The companies on Wednesday did not share details of the deal. It puts the largest fiber network in greater downtown Detroit into the hands of Everstream, a company servicing Midwest businesses with more than 13,000 miles of fiber. The tie-up will help to lay the ground for even more capabilities such as 5G that are desirable to startups and technology companies, Rocket Fiber's founders said.
"When we started the company, there was a huge need for a company like Rocket Fiber that could build a next-generation fiber network for the city and beyond," said Edi Demaj, Rocket Fiber's chief operating officer. "Building the infrastructure like Rocket Fiber has added quite a bit of value to the city, which was a goal. I can't think of a better way to do that that allows companies to come in and innovate and build."
The deal with Everstream, which is on track to close by early May, will connect Rocket Fiber's customers to its infrastructure elsewhere in Michigan and across the Midwest, providing greater resources to its customers and giving them the opportunity for more cohesive service throughout the region.
Commercial Rocket Fiber customers will switch to the Everstream business-only network provider. Its residential customers, however, will continue to receive service under the Rocket Fiber brand, Everstream CEO Brett Lindsey said.
After beginning to solicit options six months ago to grow the company, Rocket Fiber executives chose Everstream for the financial strength of its offer, CEO Marc Hudson said.
"It was our belief that we were complementary to what they do," he said. "They were a fiber technology network extremely customer-centric like us with a broader footprint."
With Rocket Fiber's 41 miles of network, Everstream completes its coverage of all major Michigan markets. Everstream plans to maintain two downtown Detroit offices that currently house more than 75 employees, Everstream's Lindsey said.
The acquisition is a part of Everstream's $250 million commitment to build out 15,000 miles of fiber across the Midwest and expand into five new markets this year.
The company plans to invest tens of millions of dollars across the state of Michigan, half of which is planned for direct customers such as health-care facilities and higher education. The other half will be investments for wholesale providers, who are predominantly wireless carriers that also will need robust and dense fiber networks to provide faster fifth-generation wireless technology service.
"Today's announcement prepare us for the 5G rollout to happen not only in Detroit but all markets across the Midwest," Lindsey said.
Such capability is expected to be important for the deployment of autonomous vehicles and for attracting investment from technology-dependent companies. Since Rocket Fiber launched in 2014, companies such as Accenture plc, Ford Motor Co., Google LLC, Microsoft Corp. and Tata Technologies have announced new offices in the city.
Hudson and Demaj with Randy Foster, chief technology officer, founded Rocket Fiber. They had collaborated on the idea over email chains while Hudson and Foster were software engineers at Quicken and Demaj was working for Gilbert's real estate company, Bedrock LLC. Gilbert provided the funding for their venture through an internal incubation opportunity.
The trio will help the transition of Rocket Fiber to Everstream but said they have some other projects in the works and hope to make more announcements over the next year, Demaj said. Those ventures also would be based in Detroit, Hudson added.
"We have grown up around the negative narrative that has surrounded Detroit in the region," Hudson said. "When we started working down here, we got to be a part of this revelation. It is a dream come true to see how far it has come and to be a part of the rocket ship Detroit is."
The acquisition also marks the first Gilbert-backed startup to spin off from the Rock Family of Companies. Gilbert in addition has reduced his investment in the casino and gaming business. He last year sold off Greektown Casino in a $1 billion sale to Penn National Gaming Inc. and real estate investment trust VICI Properties inc.