Marc Ganzi heads ‘exclusive bidder’ for Dan Caruso’s Zayo

12 April 2019 | Alan Burkitt-Gray

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Marc Ganzi’s Digital Colony is a key member of a consortium that now has exclusive rights to bid for Zayo, say reports this morning.

According to an unverified report from Reuters, US-based Digital Colony plus Swedish investor EQT Infrastructure and Stonepeak Infrastructure Partners of the US have emerged at the head of the race for Zayo.

Last week Ganzi refused to comment to Capacity about Zayo, after Capacity reported that Zayo, led by Dan Caruso (pictured) had set a deadline of today for bids. Reports even a few days ago said “at least four” bids were likely to come in.

Now the bidding war appears to have been shortened, with the Ganzi consortium emerging ahead of the deadline as the preferred bidder.

What is still unclear is how much the Digital Colony-EQT-Stonepeak consortium is willing to pay. Reports still hover between $8 billion and $9 billion, excluding the $5.9 billion has in long-term debt.

Zayo’s shares closed at $30.78 on the New York Stock Exchange, having fluctuated widely between $39.66 and $20.50 over the past year.

Zayo’s third quarter ended two weeks ago, on 31 March, and the company is due to hold an earnings call on 9 May. Any bid that emerges in the next few days is certain to need regulatory approval in the US, Canada and Europe, across which Zayo has 130,000 miles of fibre and 51 data centres.

All three partners in the consortium that has emerged on top have extensive experience of the telecoms industry so are likely to be able to value Zayo’s assets well.

Digital Colony invests in towers, data centres, small cells and fibre, via a digital infrastructure specialist, Digital Bridge.

EQT’s investments include Broadnet/GlobalConnect, a northern European fibre and data centre company, IP-Only, a Swedish fibre network, and Segra, formed of two US fibre networks, Lumos Networks and Spirit Communications.

Stonepeak’s investments include Cologix, the operator of data centres in the US and Canada, euNetworks, the European carrier, wireless connectivity operator Extenet, plus tower company Vertical Bridge, which is also part of the wider Ganzi business.

Both Ganzi and Caruso have been speakers at Metro Connect, the annual Florida conference organised by Capacity Media. Reuters suggested a deal could be announced before the end of April, citing sources who did not want to be identified “because the matter is confidential”.