Fiber Provider Zayo Will Go Private In $14.3 Billion Deal

Fiber network infrastructure specialist and network service provider Zayo has been acquired and will be taken private by global investment firms Digital Colony Partners and the EQT Partners.

Communications infrastructure provider Zayo Group Holdings Inc. on Wednesday said that it had agreed to be acquired by global investment firms Digital Colony Partners and the EQT Infrastructure IV fund in a deal valued at $14.3 billion.

The acquisition comes as the Boulder, Colo.-based company has reportedly been facing challenges in the crowded fiber space. Zayo said in March that it was evaluating strategic alternatives, which led to speculation of a possible takeover bid.

The company said the offer price represents a 32 percent premium to the volume-weighted price average of the last six months of $26.44. Shares of Zayo were up 7.84 percent to $33.02 on Wednesday afternoon.

The transaction includes $5.9 billion of Zayo’s net debt obligations that the two investment firms will be taking on. The agreement grants Zayo shareholders $35.00 in cash per share of Zayo’s common stock and was approved by Zayo's board of directors.

[Related: Zayo Continues Its Network Infrastructure Tear, Plans To Acquire Canadian Telecom]

Via the terms of the agreement, Zayo will go from public to private and the Zayo team will continue to operate and execute on the company’s strategy from its current headquarters in Colorado, the company said in a statement.

Zayo's extensive network stretches 130,000 miles in North America and Europe and includes extensive metro connectivity to thousands of buildings and data centers, according to the company. Zayo’s communications infrastructure includes dark fiber, private data networks, wavelengths, Ethernet, dedicated Internet access, and colocation services. The company owns and operates a Tier 1 IP Backbone and 51 carrier-neutral data centers.

“Both [Digital Colony and EQT Partners] 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. I am confident this partnership with EQT and Digital Colony will empower Zayo to accelerate its growth and strengthen its industry leadership," said Dan Caruso, Zayo’s chairman and CEO in a statement.

Zayo was expected to release its fiscal third-quarter earnings on Thursday, but the carrier instead reported its earnings its on Wednesday as it revealed the acquisition deal. Zayo posted revenue of $647.2 million in the period, which exceeded Wall Street forecasts of $640.2 million.

Zayo in April 2017 brought on Industry veteran Andrew Crouch as its president and chief operating officer, who resigned from the company in May 2018. At the same time, Zayo named Scott Forbush as its channel chief, who has since left to join master agent Telarus as the company's senior vice president of sales.

The deal is expected to close in the first half of 2020, the company said.