Digital Colony and EQT to acquire Zayo for $14.3bn

08 May 2019 | Natalie Bannerman

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Marc Ganzi’s Digital Colony and EQT Infrastructure IV fund has agreed to buy fibre network owner Zayo Group Holdings for $14.3 billion including debt.

The deal will transition Zayo from a public company to a private company while the Zay team continue to lead the company forward, base in Boulder, Colorado.

“Digital Colony and EQT share our vision that Zayo’s Fibre Fuels Global Innovation, “said Dan Caruso (pictured), Zayo’s Chairman and CEO. “Both are experienced global investors in the communications infrastructure space, and they appreciate our extraordinary fibre 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.”

Under the terms of the agreement, Zayo’s shareholders will receive $35 in cash per share of common stock in a transaction valued at $14.5 billion. Additionally, the deal represents a 32% premium to the volume-weighted price average of the last six months of $26.44.

“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,” said Jan Vesely, partner at EQT Partners and investment advisor to EQT Infrastructure. “As one of the most active global infrastructure investors with a demonstrated track record of success in the telecommunications and fibre 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.”

In April, Capacity reported that Digital Colony was a key member of the consortium that had exclusive rights to bid for Zayo, which included EQT Infrastructure and Stonepeak Infrastructure Partners. However, no official comment was given at the time.

“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,” said Yancey Spruill, Zayo’s Lead Independent Director. “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.”

In the same month, Digital Colony acquired a UK small cell specialist, iWireless Solutions, adding it to StrattoOpencell, its unit that installs mobile services inside buildings.

“Zayo has a world-class digital infrastructure portfolio, including a highly-dense fibre network in some of the world’s most important metro markets, Marc Ganzi, managing partner of Digital Colony. “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."

The deal is expected to close in the first half of 2020 subject to customary conditions, which include regulatory clearance and Zayo shareholder approvals.