Bialgebras and Frobenius algebras are different ways in which monoids and comonoids interact as part of the same theory. Such theories feature in many fields: e.g. quantum computing, compositional semantics of concurrency, network algebra and component-based programming. In this paper we study an important sub-theory of Coecke and Duncan's ZX-calculus, related to strongly-complementary observables, where two Frobenius algebras interact. We characterize its free model as a category of ℤ2-vector subspaces. Moreover, we use the framework of PROPs to exhibit the modular structure of its algebra via a universal construction involving span and cospan categories of ℤ2-matrices and distributive laws between PROPs. Our approach demonstrates that the Frobenius structures result from the interaction of bialgebras.