The deal will take Zayo from a public company to a private company, though the current team will stay on and remain headquartered in Boulder, Colorado, the company said. Digital Colony and EQT are paying $35.00 per share in cash and are taking on $5.7 billion in debt, according to Zayo.
Activist investors led by Starboard Value and Sachem Head Capital Management were pressuring Zayo CEO Dan Caruso to sell, Bloomberg reports. Shares of Zayo reached a low point in December 2019 thanks to organizational changes and concerns over an overcrowded fiber lines market.
Caruso commented on the deal:
“I am confident this partnership with EQT and Digital Colony will empower Zayo to accelerate its growth and strengthen its industry leadership.”
Closure of the deal is subject to customary regulatory conditions. Goldman Sachs and J.P. Morgan are serving Zayo Group as financial advisors. Morgan Stanley and Deutsche Bank are advising Digital Colony and EQT.
Fiber Network M&A
This isn’t the first investment EQT has made in the fiber network market. In July 2017 the firm bought Lumos Networks for approximately $950 million.
Indeed, fiber network owners have been prime M&A targets. Deals we've tracked include:
- Apr 2018: ZenFi Networks and Cross River Fiber merged to create a “leading communications infrastructure provider” that offers fiber and colocation services in the New York and New Jersey metro areas.
- May 2018: ExteNet Systems acquired Hudson Fiber Network (HFN), gaining a fiber optic infrastructure footprint across the New York and New Jersey region.
- Dec 2016: Consolidated Communications acquired FairPoint Communications, a broadband fiber and managed services provider for $1.5 billion in stock.
Despite investor concerns that the market may be getting crowded, a 2017 Deloitte report suggests the opposite. It stated that, in order for 5G networks to thrive, the U.S. required $130 billion to $150 billion in fiber infrastructure over the next five to seven years.