Mission-critical bandwidth provider Zayo Group Holdings has announced it has signed a definitive merger agreement to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund.
The transaction will result in Zayo transitioning from a public company to a private company. Under the new ownership, the Zayo team would continue to execute the Company's strategy and remain headquartered in Boulder, Colorado.
Under the terms of the agreement, which was unanimously approved by Zayo's Board of Directors, shareholders will receive $35.00 in cash per share of Zayo's common stock in a transaction valued at $14.3 billion, including the assumption of $5.9 billion of Zayo's net debt obligations.
The offer price represents a 32% premium to the volume-weighted price average of the last six months of $26.44.
“Digital Colony and EQT share our vision that Zayo's Fiber Fuels Global Innovation. Both 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,” says Zayo chairman and CEO Dan Caruso.
“I am confident this partnership with EQT and Digital Colony will empower Zayo to accelerate its growth and strengthen its industry leadership.
Digital Colony managing partner Mark Ganzi is confident in the huge investment.
“Zayo has a world-class digital infrastructure portfolio, including a highly-dense fiber network in some of the world's most important metro markets,” says Ganzi.
“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."
EQT Partners investment advisor Jan Vesely says the acquisition is expected to be beneficial to all involved.
“We are excited by the opportunity to team up with Zayo, in a transaction reflecting EQT's commitment to investing in market-leading infrastructure companies whose innovations and services are transforming society,” says Vesely.
“As one of the most active global infrastructure investors with a demonstrated track record of success in the telecommunications and fiber industry, we are confident that EQT, along with Digital Colony, are ideal partners for Zayo as the Company embarks on its next phase of growth. We look forward to working closely with Zayo's global team, whose entrepreneurship, collaboration and customer partnerships are best in class.
Zayo lead independent director Yancey Spruill says the lengthy process will yield results immediately.
“Following a comprehensive review of strategic alternatives, the Zayo Board of Directors concluded that the sale of Zayo to Digital Colony and EQT Infrastructure is in the best interest of Zayo and all its stakeholders,” says Spruill.
“The transaction delivers immediate and substantial value to shareholders and will strengthen Zayo's financial flexibility, enabling the company to increase investments and better position itself for long-term growth and profitability.
The closing of the deal is subject to customary conditions, including regulatory clearance and Zayo shareholder approvals. The transaction is expected to close in the first half of calendar 2020.