Zayo is set to become a private company, announcing Wednesday that investment firms Digital Colony and EQT Infrastructure agreed to acquire the communications infrastructure provider in a deal valued at $14.3 billion.
The deal, which includes the assumption of $5.9 billion of Zayo’s debt, is expected to close in the first half of 2020. Regulators and shareholders must still approve the deal, which was already greenlit by Zayo’s board of directors.
Under the agreement, shareholders will receive $35 in cash per share of Zayo common stock.
It appears current Zayo CEO Dan Caruso and team will stay on under the new ownership, according to a press release, which says the team will also remain headquartered in Boulder, Colo.
“Zayo has a world-class digital infrastructure portfolio, including a highly-dense fiber network in some of the world’s most important metro markets,” said Marc Ganzi, managing partner of Digital Colony, in a statement. “We believe the company has a unique opportunity to meet the growing demand for data associated with the connectivity and backhaul requirements of a range of customers. We are excited to work alongside the management team and EQT to grow the business and expand its presence in the global market.”
The announcement did not come as a surprise to some analysts, with Wells Fargo Senior Analyst Jennifer Fritzsche indicating in a Tuesday note to investors that a deal had finally happened, in-line with the firm’s expectations, “after months of speculation that Zayo would be taken private.”
Zayo has significant fiber assets with a 130,000-mile network in North America and Europe, including metro connects to thousands of buildings and data centers. Zayo offers dark fiber, private data networks, wavelengths, Ethernet, dedicated internet access, and colocation services. The company also owns and operates a Tier 1 IP backbone and 51 carrier-neutral data centers.
Fritzsche wrote that while Wells Fargo analysts “believe Zayo has the most valuable expansive fiber assets of any public or private company, it has struggled to reach its growth targets in recent years.”
The firm thinks “there will be a natural synergy between Zayo’s business and Digital Colony/EQT,” Fritzsche wrote. She noted Digital Bridge’s portfolio includes multiple parts of the communications infrastructure ecosystem such as towers, data centers, and small cells, while EQT has previous experience in the North American fiber market.