Zayo acquired by PE groups for $14.3bn

July 2019 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

July 2019 Issue

In a deal which will see it transition from a public to a private company, bandwidth infrastructure solutions provider Zayo Group Holdings, Inc is to be acquired by affiliates of Digital Colony Partners and Swedish private equity (PE) group EQT Partners in a transaction valued at $14.3bn.

Under the terms of the definitive merger agreement – which has been unanimously approved by Zayo’s board of directors – shareholders will receive $35.00 in cash per share of Zayo’s common stock, including the assumption of $5.9bn of Zayo’s net debt obligations.

Providing mission-critical bandwidth to the world’s most impactful companies, Zayo’s 130,000-mile network in North America and Europe – which serves wireless and wireline carriers, media, tech, content, finance, healthcare and other large enterprises – includes extensive metro connectivity to thousands of buildings and data centres. Its communications infrastructure solutions provide low latency private connectivity that attaches enterprises to their public cloud environments.

“Digital Colony and EQT Partners share our vision that fibre fuels global innovation,” said Dan Caruso, chairman and chief executive of Zayo. “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 will empower Zayo to accelerate its growth and strengthen its industry leadership.”

Under the new ownership of Digital Colony – a global investment firm dedicated to strategic opportunities in digital infrastructure – and EQT Partners – which works with portfolio companies to achieve sustainable growth, operational excellence and market leadership – Zayo is well-positioned to meet connectivity-driven demand in key North American and European markets. Zayo will remain headquartered in Boulder, Colorado.

“Zayo has a world-class digital infrastructure portfolio, including a highly-dense fibre network in some of the world’s most important metro markets,” said 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 Partners to grow the business and expand its presence in the global market.”

Serving as financial advisers to Zayo are Goldman Sachs and J.P. Morgan. Skadden, Arps, Slate, Meagher & Flom is serving as legal counsel. Morgan Stanley and Deutsche Bank are acting as financial advisers to Digital Colony and EQT Partners, with Simpson Thacher serving as legal adviser.

“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 Partners, along with Digital Colony, are ideal partners for Zayo as the Company embarks on its next phase of growth,” said Jan Vesely, a partner at EQT Partners. “We look forward to working closely with Zayo’s global team, whose entrepreneurship, collaboration and customer partnerships are best in class.”

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 2020.

Yancey Spruill, lead independent director at Zayo, concluded: “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.”

Fraser Tennant