M&A  April 4, 2019

Multiple bidders eye potential purchase of Zayo

BOULDER — Odds are increasing that pressure from activist investors will lead to a sale of Boulder-based Zayo Group Holdings Inc. (NYSE: ZAYO). StreetInsider reported Wednesday that multiple bidders are involved in a potential purchase of the company, which could be sold whole or in part. A source told StreetInsider that final bids are due next April 12.

Zayo provides communications infrastructure services, including fiber and bandwidth connectivity, colocation and cloud services. The company employs about 450 in Boulder and about 3,800 worldwide.

Zayo in February abandoned plans to split into two separate companies — a plan first announced in November 2018 — and in March responded to activist investors who had been pushing for a sale.

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Zayo’s corporate headquarters in Boulder. Courtesy Zayo

“The Zayo Board and management team take their fiduciary responsibilities to shareholders seriously,” Zayo wrote in a response to investors pushing for a sale. “This includes actively considering and evaluating opportunities to enhance shareholder value, including an assessment of the company’s strategic priorities and opportunities, such as potential partnerships, business combinations and other transactions. We are objectively evaluating all options that will further this goal, while at the same time remaining focused on our mission to provide communications infrastructure to the world’s most impactful companies.”

Activist investors pushing for a sale include Starboard Value LP, a hedge fund that had amassed 4 percent of Zayo stock, and Sachern Head, another activist fund.

StreetInsider identified numerous potential buyers, including Digital Bridge/EQT (NYSE: EQT), a unit of Digital Colony; a private-equity consortium that includes Blackstone, Stonepeak and others; and two or more other groups.

StreetInsider said a potential purchase price could be in the range of $32 to $34 per share, which would amount to $7.5 billion to $8 billion, based on almost 235 million shares outstanding, or $3 billion for part of the company.

Goldman Sachs and JPMorgan are serving as financial advisers to Zayo, while Skadden Arps is acting as legal adviser.

Zayo reported in a Thursday filing with the U.S. Securities and Exchange Commission that it has extended a revolving credit facility that was due to mature on April 17, 2020. The agreement has been extended to the earliest of April 17, 2023 or six months prior to the maturity of a $500 million loan tranche, which currently is set to mature on Jan. 19, 2021.

BOULDER — Odds are increasing that pressure from activist investors will lead to a sale of Boulder-based Zayo Group Holdings Inc. (NYSE: ZAYO). StreetInsider reported Wednesday that multiple bidders are involved in a potential purchase of the company, which could be sold whole or in part. A source told StreetInsider that final bids are due next April 12.

Zayo provides communications infrastructure services, including fiber and bandwidth connectivity, colocation and cloud services. The company employs about 450 in Boulder and about 3,800 worldwide.

Zayo in February abandoned plans to split…

Ken Amundson
Ken Amundson is managing editor of BizWest. He has lived in Loveland and reported on issues in the region since 1987. Prior to Colorado, he reported and edited for news organizations in Minnesota and Iowa. He's a parent of two and grandparent of four, all of whom make their homes on the Front Range. A news junkie at heart, he also enjoys competitive sports, especially the Rapids.
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