Zayo has confirmed a deal to be acquired by the infrastructure investors Digital Colony and EQT Infrastructure for USD 14.3 billion. The new owners said they plan to continue Zayo's strategy and keep the private company based in Colorado.
The purchase price includes assumption of Zayo's USD 5.9 billion in net debt, accumulated through a long series of acquisitions of broadband network assets across key markets in North America and Europe. Zayo had been considering splitting the company into infrastructure and managed services, but pressure from shareholders caused the group to consider takeover offers as well.
The bid of USD 35 cash per share from Digital Colony and EQT represents a 32 percent premium on Zayo's average share price in the past six months and a small premium on the last closing price before the announcement of USD 31. It's still below a peak of nearly USD 40 in July 2018.
Digital Colony and EQT are already experienced infrastructure investors, with multiple acquisitions of network assets to serve especially the wholesale market with backhaul and small cell infrastructure. The takeover is expected to provide value to Zayo shareholders and strengthen the company's financial flexibility to pursue future growth, they said.
The deal is expected to close in the first half of 2020, pending approval from regulators and Zayo shareholders.
Zayo announced the deal alongside results for its fiscal third quarter to March, showing revenue up 5 percent year-on-year to USD 647.2 million. Adjusted EBITDA was little changed on a quarterly and annual basis at USD 321 million, good for a 50 percent margin, while levered free cash flow improved to USD 47 million from USD 28 million in Q2 but was down from USD 68 million a year earlier.
