Fiber provider Zayo Group has agreed to be acquired by infrastructure investment firms Digital Colony and the EQT Infrastructure IV fund, which will take the company private in a transaction valued at $14.3 billion.
The transaction includes the assumption of $5.9 billion in debt from Zayo, which has invested heavily in fiber deployment as well as acquisitions of smaller fiber companies over the years; the company went public in 2014. Zayo Group is a significant player in the backhaul market and has a 130,000-mile fiber network in North America and Europe, with assets including dark fiber, colocation services, a tier one IP backbone and 51 data centers.
“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.”
Zayo said that its leadership team will continue to execute on its strategy and that the company’s headquarters will remain in Boulder, Colorado. Zayo’s board of directors unanimously approved the agreement, which is expected to close in the first half of next year. Yancey Spruill, Zayo’s lead independent director, said that after a comprehensive reivew of strategic alternatives, the Zayo board concluded that the sale was in the best interest of shareholders and the company, and will “strengthen Zayo’s financial flexibility, enabling the company to increase investments and better position itself for long-term growth and profitability.”
Zayo Group had previously been considering a split of the company, announced late last year, into a communications infrastructure company and an enterprise services company; that plan was dropped earlier this year. Rumors of a sale have been in the air for some time, following a sustained drop in company value and calls by some investors for the company to consider a sale; those rumors ramped up after Zayo cancelled its mid-March investor day, and published reports indicated that Digital Colony and EQT were involved in an infrastructure investment coalition to purchase the company and seeking additional investors to join them.
In tandem with the acquisition announcement, Zayo Group also put out its quarterly results, which included revenues for the quarter of $647.2 million, down slightly from $649 million in the year-ago quarter; and net income of $34.7 million, up from $23.5 million in the first quarter of 2018. Zayo cancelled its earnings call scheduled for tomorrow.
Dan Caruso, Zayo’s Chairman and CEO, said in a statement that the two investment firms who are buying Zayo “are experienced global investors in the communications infrastructure space, and they appreciate our extraordinary fiber infrastructure assets, our highly talented team and our strong customer base.”
